Veteran analyst David Errington, who has been researching ASX-listed retail stocks since 1991, says he took to heart a piece of advice from then-Wesfarmers managing director Michael Chaney when the young broker was trying to wrap his head around the retail conglomerate in the mid-’90s.

Chaney’s message was simple. Ultimately, a CEO has to convince his or her shareholders to fund the company, and this requires earning more than the cost of that capital.