, Lynne Trencher,
Chief Executive, Charles Hamilton,
Next week, Healthway plc, the health and beauty chain, gets a new Chief Executive. Here's our reporter, Lynne Trencher, to tell us why many people regard the job as one of the most difficult in retailing. Hello, Lynne.
Hello. No, it isn't an enviable position. Robert Henlow, Healthway's new CEO, is taking control of a company which may have been a well-loved and trusted retail brand for many years, but its core business is mature, and successive managements simply haven't come up with a winning formula to deliver dynamic sales growth. And the shareholders see Henlow as Healthway's last chance.
The company faces stiff competition, doesn't it?
That's right. In fact, most town-centre health and beauty chains are feeling the pinch, with few planning to expand. Unlike food, it's a high-margin business, which gives supermarkets, particularly those on out-of-town sites, scope to sell similar products for considerably less. Even the development of online shopping hasn't yet outweighed the convenience of out-of-town sites.
Robert Henlow is coming from a company with a very different sort of culture from Healthway, isn't he?
Yes, he's moving from a firm that's very open, with plenty of staff coming in from other companies, or indeed industries. Healthway, on the other hand, has a culture where people join the group and either leave quickly, or not until they retire. It's famous for breeding its own managers, and outsiders have traditionally not been welcomed.
Healthway's financial strategy has been criticised in recent years, I believe.
Under the last Chief Executive, Charles Hamilton, Healthway concentrated on the bottom line, with the aim of supporting the share price. Even the one acquisition that the company made had that same goal. But this strategy had its downside: very few improvements were made within the business, so their IT, for instance, is now several years out of date.
Wasn't it Charles Hamilton who started Healthway's beauty treatment centres?
Yes, almost his first major action as Chief Executive was to set up a separate chain of stores that, in addition to selling health and beauty products, provided massage and other treatments. This ran alongside the existing stores. But even at the outset, few investors were taken in by his over-optimistic forecasts, and the doubters were proved right. Just before he left the company, he closed the centres and admitted his mistake.
Hamilton also made drastic staffing changes, didn't he?
He certainly did: he slimmed down the head office, he undertook a complete overhaul of the top management team and tidied up the company's international operations. Of course, there was a danger that in changes on that scale, mistakes would be made and the company would lose individuals, or even whole departments, that it needed. He managed to avoid that, but he was quite unable to communicate the reasons behind the changes, so he created an enormous amount of ill will.
Hm. Has Robert Henlow announced any plans yet?
When he starts work next Monday, he'll find a report from consultants, advising the disposal of several underperforming stores that are too small ever to do well. However, they do think the current total should be maintained, which would be achieved by ploughing money into more profitable large-store formats. Even though this means adding to the payroll, the consultants say the increased profitability will make it worthwhile.
So, all in all, it's quite a challenge for Robert Henlow.
It certainly is, not least because he's never run a quoted company of this size before, and he's one of the youngest chief executives of a business like this. He's taking a huge step from his previous position, though at least the health and beauty sector isn't entirely new to him. He's not going to find it at all easy to tackle all Healthway's problems.
Lynne, thank you.
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