Monday, October 21, 2013

David Jones boss Paul Zahra to quit. DJs announces "succession plan" but no successor revealed.

It appears that Paul Zahra's decision to resign as David Jones chief executive caught the  retailer's board by surprise.

The timing of the announcement is less than helpful in a tough retail atmosphere a few months out from Christmas as online sales continue to erode the traditional consumer base.

So this afternoon, after trading had closed on the ASX, David Jones was put in the predicament of announcing  "a succession plan" with no clear successor in sight.

As the market announcement makes clear, the succession process "could take some time".

Mr Zahra's apparently sudden decision, exposes the lack of succession planning by the David Jones board.

Mr Zahra was appointed in June 2010 when he replaced Mark McInnes who was forced to step down over allegations of sexual harassment.

While Mr Zahra had been in the role for more than three years, it is long enough for a board to begin to consider succession candidates to ensure a smooth transition.

The murky circumstances in which Mr McInnes left the company should have provided plenty of lessons on how boards need to expect the unexpected.

The most recent case study of succession planning came earlier this year when Marius Kloppers joined BHP Billiton chairman Jac Nasser in announcing Andrew Mackenzie as his replacement as chief executive.

Investors are unlikely to welcome the new uncertainty, despite assurances from DJs chairman Peter Mason that Mr Zahra leaves the company "in a solid financial position."

Any prolonged search could put a cloud over Mr Zahra's ability to take major decisions on the direction of the company.

David Jones spindoctors are being cautious about today's surprise announcement and have declined the ABC's requests for interviews.

David Jones shares closed 0.7 per cent higher today $2.85 which is below the year's high set in April of $3.15.

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