Reece CEO Peter Wilson: family affair supplies proud legacy

As a teenager Peter Wilson had only one ambition in life: to follow in the footsteps of his famous ­father.

Reece chief executive Peter Wilson. Picture: David Geraghty

As a teenager Peter Wilson had only one ambition in life: to follow in the footsteps of his famous ­father.

“I was really lucky. From since I was young, this is all I wanted to do,” says the chief executive of Reece, the nation’s biggest ­bathroom and plumbing-supply retailer. “So every holiday I would work in the business. I studied my accounting and marketing.

“But I was obsessed. I knew what I wanted to do.”

The Reece business began in 1919 when Harold Joseph Reece started selling hardware products from the back of his truck in Melbourne suburbia. It was listed on the Australian Stock Exchange in 1954 and a decade later was bought by the Melbourne-based Wilson family led by its patriarch Alan Wilson, whose father and grandfather had both been plumbers. Forty three years later, his son Peter took over the day-to-day operations and hasn’t looked back. Today Reece is a business turning over more than $2 billion and year after year it has delivered double-digit profit growth, solid share price gains and juicy ­dividends for investors.

It’s made the Wilson family one of the richest in the nation. But you will never read or hear about it. And that’s just the way the deeply private Wilsons like it.

Asked to name his father’s most important lesson, Peter ­Wilson’s answer is instant.

“The guide for us is our values. There are 10 of them. And one of the key ones is humility, that has always been part of our DNA. Just let the results do the talking. ­Because in the end success will do you in. It is about being proud of not having an ego,” he says in an interview with The Weekend ­Australian.

And then there is the Reece work ethic. “My father has always led by example. He is a natural people person. But he’s shown that if you work hard enough you can achieve anything. Keep ­persisting, keep trying.”

Alan Wilson remains on the Reece board as executive chairman alongside his brother Bruce who is a board member. The ­family still owns 70 per cent of the company.

There are six men on the board, including accounting legend Ronald Pitcher, who has been a director since 2003 and is chairman of the audit committee. While the structure is a no-no in modern corporate governance, it is the Wilson way. Alan Wilson has repeatedly claimed hardware was largely a “male-dominated industry’’ and that he would hire a female director if he found one that was suitable.

He still comes into the Reece head office in Burwood, in Melbourne’s east, everyday. But never has he cramped the style of his now 48-year-old son.

“It is unusual, yes. But he is a ­father that gives a lot of freedom,” Peter Wilson says. “If the roles were reversed I’m not sure if it would work because I am more hands-on. My role is to be the change agent. When I started we had 40 stores, an old culture. We were really successful but I felt we just needed to overhaul everything.”

In 2014 the company refreshed its technology to help service its 577 retail outlets, introduced a raft of new products from the best product manufacturers in Europe and the US and bought refrigeration and airconditioning parts business Actrol for $280 million.

One long-time Reece follower who declines to be named agrees Alan Wilson was an exceptional manager but that his son truly modernised the company. “Alan was right for the first 40 years but Peter came in at an important point and took it to another level. It is extraordinarily rare you can find that in a father and a son,” the person says.

Aurizon chairman Tim Poole, who joined the Reece board as its youngest independent director in July, says he was attracted to the role because of Reece’s “incredible leadership” and “incredible story”. “It is truly a great Australian story because of the humility piece. You are not going to hear it much from these guys. But I have worked with lots of management teams and you would not see one better,” he says. Peter Wilson and his team produced another record result last year with sales up 9.2 per cent to $2.28bn and net profits up 17.5 per cent to $280m. The company’s EBIT to sales margin was 12.7 per cent, its highest level in over a decade.

During the year Reece ­completed the integration of the Actrol business and opened new distribution centres in Perth and Sydney.

At the AGM in November Peter Wilson outlined to investors several new products and services that had been introduced into the group last year before revealing profits would be up more than 6 per cent for the half year. The AGM is the only day of the year when Reece’s competitors can get any insight into what makes the company tick.

But Peter Wilson puts it ­simply: “The secret is our model and our focus on the customer. We have a history of innovating and investing back in the business. We have a great culture and it has been built over a long period of time.”

Reece shares rose from $34.19 to $45 over the past year and surged past the $46 mark earlier this month. In the past fortnight they have fallen back to about the $43 mark where they were trading last August.

While Peter Wilson says staff and customer engagement within the company is now at record ­levels, that was following a nine-month review undertaken by the management team to ensure its values — known as “The Reece Way” were still relevant.

“We have pretty much achieved our 2020 vision, the things we set out to do. Our goal was to do the best by continuing to innovate and reinvest and in our sector we already are. So we wanted to have a more inspiring, broader purpose. Rather than having this end state of greatness as a goal, we said ‘Let’s do something great everyday’. Because a lot of people in business just turn up and go through the motions,” he says.

“We are big into the sports model of leadership. The All Blacks have this great story called “the ­Legacy” — and when you join the All Blacks, your role is to lead the jersey into a better place.

“It helped us with one of our new values. We are a big marketing company and a real people business. And we have really ­engaged staff. We have great ­supply chain capability and have invested heavily in technology. So our new vision is doing something everyday that helps improve the lives of our customers and our people. That sums it all up.”

Asked what keeps him awake at night, there is a long pause before Wilson answers: “How do we keep getting better, innovating and growing? We have a great market strength and we need to defend that. That keeps me going. And then finding another growth vehicle. We don’t have any debt and own our own stores so we are a hard model to compete against. But I am worried whether we are peaking out. There is no doubt the housing market is at a peak.”

Indeed the continued strength of the Australian housing market will be key to Reece continuing to deliver the goods for its investors.

Alan Wilson doesn’t mince words when asked if he fears the cycle has peaked.

“I’m a human being like you and you wonder where it will all finish. I think we are all concerned. I don’t know how young people will ever be able to afford to live in Melbourne, Sydney or Brisbane,” he says. “I’m as wise as you as to where it is going to go. But to me it is fully priced now, in fact over fully priced. But it is all being driven by Asian money.”

Reece has also looked on as one of its competitors, the Woolworths-backed Masters has fallen by the wayside over the past year. Wilson senior says fire sales in the lead-up to the closure of the business had an impact on Reece, but that it was hard to measure.

“They did sell bathroom products and fittings so it has to have an impact somewhere. I know it is affecting Bunnings. But Masters did not have a strong plumbing business. You can see by the sorts of products we have, we don't clash with them,” he says.

Alan Wilson said last year he had only a “superficial’’ role in the day-to-day running of the business, but still enjoys “the property part and the product part”.

He said he was confident Reece was “running properly” under the next generation, describing it as “very satisfying”. And his son will continue to spend every working hour ensuring that he will not let his father down and continue the Reece legacy.

“We are really close and we talk everyday. But Dad and I are really different. We really ­complement each other. He is the entrepreneur. My role has more been just to organise the company and professionalise it,” Peter ­Wilson says.

“It exceeded his ­expectations 25 years ago. He is really comfortable. And I have much bigger expectations. But we make a really good team.”