By James Davey
LONDON (Reuters) – British clothing retailer Next joined the one billion-pound profit club on Thursday, but while investors celebrate, they are also starting to worry about the lack of a clear succession plan for its star CEO of 24 years Simon Wolfson.
His stellar track record has made Next one of only a handful of big British companies closely associated with their boss.
The 57-year-old, who joined Next in 1991 on the shop floor when his father David chaired the business, has helped steer it through Britain’s many economic ups and downs, building a vast online business, handsomely rewarding investors via a 12-fold increase in the share price, and priming the group for a new era of international expansion.
But after such a long and successful tenure – Wolfson is by far the longest-serving head of a FTSE 100 business – investors are getting nervous about what will happen should the CEO, who personally writes Next’s 60-page results statements, decide at some stage to step down.
“Simon’s arguably the most successful CEO or strongest CEO in the FTSE 100 over the very long term. The flip side of that coin is a natural level of concern if at some point for any reason he wasn’t in the business,” said James Goldstone, fund manager at Invesco, a top five Next investor.
Several major investors in Next told Reuters their anxiety was compounded by a lack of shareholder and media engagement by Next executives below Wolfson, making it difficult for them to assess the depth and level of leadership readiness, or bench-strength.
Wolfson’s sale of more than 29 million pounds ($37 million) of Next shares last September even prompted some fears of a managed exit and rumblings persist about potential political ambitions. Wolfson has sat as a Conservative Party peer in Britain’s House of Lords since 2010.
“There is a reasonable amount of key man risk with Simon,” said Will McIntosh-Whyte, a multi-assets fund manager at Rathbones Asset Management which has Next shares in its higher risk portfolios.
When asked about succession plans, Wolfson would not be drawn on the issue: “I think it’s really unhelpful for companies to discuss these things in public,” he said. He added: “I am only 57”.
BENCH STRENGTH
The most senior executives below Wolfson are Richard Papp, group merchandise and operations director, Jane Shields, group sales, marketing and HR director, and Jeremy Stakol, group investments, acquisitions and third party brands director. Finance chief Jonathan Blanchard has been in his job for just nine months.
