Bottom Line: A top-heavy group in need of a shakeup

 
Marc Sidwell
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IF YOU’RE going to leave, it’s a shame to do it just when things seem to be improving. Sadly, that is Terry Duddy’s predicament as he announces his decision to move on from Home Retail Group.

Duddy was there for the gruelling years when the twin pressures of recession and technological disruption threatened to bring down the shutters, as they did for high street names like Woolworths. Now he is off, after a summer in which both Homebase and Argos announced growth for the first time in five years.

That said, it may not be bad for Home Retail Group, which still needs to shake itself up even further. Seeing like-for-like sales rise 1.9 per cent at Argos and 1.4 per cent at Homebase may be a step in the right direction, but hardly the end of the road.
One problem remains the top-heavy structure of the group. The demerger from Great Universal Stores (GUS) in 2006 left both the Homebase and Argos divisions with their own managing directors under a separate chief executive.

Duddy combined the roles of Argos MD and chief executive in 2011 and says that he found it a stretch. It remains a more natural structure for an off-balance group where, in the year to March 2013, Argos can show £100m operating profit and Homebase just £11m.

A new head may adapt better – and significantly the frontrunner to replace Duddy is the current Argos MD, John Walden.

Duddy possesses impressive retail experience and displayed genuine vision in setting out to transform a tired retail experience for the digital age. The Argos click and reserve is a neat integration of web technology with the chain’s physical footprint, now accounting for 31 per cent of total sales. But the group’s overseas adventures fared poorly and underperformance at home still has to be addressed. Time to get out the catalogue and pick a new leader and a new structure.