Guy Russo leaving as Wesfarmers’ discount department store chief

Wesfarmers will go it alone in retail after Guy Russo announced his surprise retirement yesterday after 10 years at the helm.

Wesfarmers discount department store chief Guy Russo. Picture: Josie Hayden.

Wesfarmers will go it alone without one of the architects of its recent retail revival after Guy Russo, the boss of Kmart and overall chief of its discount department store division that includes Target, announced his surprise retirement yesterday after 10 years at the helm.

The highly successful former McDonald’s Australia boss, who was plucked from semi-retirement in Hong Kong by Wesfarmers to rescue the
then-struggling Kmart, quickly developed a reputation for flamboyance, showmanship and, most of all, results.

Mr Russo famously divulged at a closed meeting with suppliers two years ago the secrets of the $18 billion discount department store sector.

“So if you want to know the difference between Big W, Target and Kmart, you are going to hear it from me — nothing,’’ Mr Russo told the meeting as he strutted the stage. “We sell stuff to people that people don’t need at low prices. You don’t die if you don’t go to a Big W or a Kmart.’’

Under Mr Russo’s watch, people have indeed been buying “stuff” as Kmart’s sales have increased almost 50 per cent and its profitability fivefold, while Target is slowly emerging from years of underperformance and countless restructures to show signs of improvement.

Mr Russo’s departure marks another sweep of Wesfarmers’ key management ranks since Rob Scott took over as chief executive in November.

Wesfarmers has recently bid farewell to the much-respected boss of its Bunnings hardware chain, John Gillam, Wesfarmers CEO Richard Goyder and finance director Terry Bowen, and Officeworks boss Mark Ward. Next month will see the boss of its biggest business, Coles’s John Durkan, leave to be replaced by new supermarkets CEO Steven Cain.

Wesfarmers said Kmart managing director Ian Bailey would take on the extra responsibility of heading the department stores division. Marina Joanou, chief financial officer of the department stores division, has been promoted to managing director of Target, effective immediately.

Wesfarmers said Mr Russo would remain an adviser to Wesfarmers and the department stores division after November 1 for the remainder of the 2019 financial year.

Mr Scott said Mr Russo had made a significant contribution since joining Wesfarmers 10 years ago, leading the transformation of Kmart into Australia’s most successful department store before becoming chief executive of the new department stores division in early 2016.

“Guy leaves a valuable legacy that is reflected in the record profit result for the department stores division for the 2018 financial year,” Mr Scott said.

“He has led a world-class turnaround of Kmart into one of Australia’s best product development and retail companies. Under Guy’s leadership, Kmart’s earnings have increased more than five-fold and more recently he has led a significant reset of Target, reducing its cost base and returning it to profitability. The record department stores earnings announced today demonstrate the enormous value that has been created for shareholders.”

Mr Scott said Mr Bailey was a natural successor to Mr Russo, having played an instrumental role in the turnaround of Kmart and then successfully leading the continued growth of the business over the past two years.

When Mr Russo started at Kmart in 2008, it has sales of $3.99bn and delivered flat earnings of $109m. By 2017, sales at Kmart had lifted to $5.57bn and earnings were growing strong to hit $553m.

Yesterday, earnings for the department stores division rose 21.5 per cent to $660m, representing record earnings under Wesfarmers’ ownership, with both Kmart and Target expanding on the prior year.