JB Hi-Fi boss Richard Murray exits to run Solomon Lew’s Smiggle, Just Jeans retail empire
Solomon Lew is placing the future of his prized billion dollar clothing empire in the hands of Richard Murray.
Solomon Lew is placing the future of his prized billion dollar clothing empire in the hands of Richard Murray, who for the last 18 years has been selling laptops, iPhones and TVs, after poaching the JB Hi-Fi chief executive in one of the biggest retail coups in years.
Mr Lew managed to stun both his own shareholders in Premier Investments as well as investors in JB Hi-Fi when before the market opened on Wednesday he named the consumer electronics boss Mr Murray as the successor to the outgoing Premier CEO Mark McInnes.
Once the most powerful double act in retail, Mr Lew will now take on a new CEO-sidekick in the JB Hi-Fi boss at a time when his Premier Investments shares are trading at record highs, is posting booming sales and has more than $400m in cash to invest in new retail or other investment opportunities.
It will hand Mr Murray – who stands to earn as much as $42m over six years – the keys to Mr Lew’s most profitable and well-known fashion and apparel ventures that sit within his $4.2 billion Premier Investments group.
This includes the fast-growing stationery chain Smiggle and sleepwear brand Peter Alexander as well as a long tail of other clothing stores such Just Jeans, Portmans and Dotti. But he will also have to deal with a very ‘hands on” chairman in Mr Lew and whose family company Century Plaza Investments is Premier Investments largest shareholder with a stake of 42.43 per cent.
“The decision to leave was a very difficult one to make,” Mr Murray said on Wednesday.
“After 18 years with the company it is time for me to take on a new challenge. I am proud to leave the business in such a strong position and the group will continue to go from strength to strength under Terry’s leadership.”
Mr Murray will take a seat at the Premier Investments board table, alongside his new chairman Mr Lew, although will not be involved in Premier’s discussions around its $1 billion equity stake in Breville or its 11 per cent stake in Myer in keeping with non-compete deals he agreed to with JB Hi-Fi.
The market looked past Mr Murray’s experience with iPhones and DVDs over fast fashion sending Premier Investments shares almost 3 per cent higher on news of his appointment.
But it was JB Hi-Fi investors counting the cost of losing one of the most successful retailers in Australia as its shares plummeted as much as 7 per cent on the news with Mr Murray’s departure in August enough to wipe $375m from its market capitalisation.
Shares in JB Hi-Fi later mounted a comeback, helped partly by news that Terry Smart, the former JB Hi-Fi chief and current boss of its strongly performing whitegoods business The Good Guys, would be returning as CEO to lead JB Hi-Fi when Mr Murray leaves.
In a move that nobody could have predicted, Mr Lew utterly ignored the traditional method of hiring highly paid headhunters to scout out a list of candidates and instead he personally sought out Mr Murray when outgoing Premier CEO Mr McInnes announced in January his plans to step down to spend more time with his young family.
The JB Hi-Fi boss will leave the consumer electronics giant at the end of August and will start at Premier Retail as its CEO and a Premier Investments executive director on October 4.
Mr Murray was the only candidate for the role, and when first approached informally by Mr Lew his interest was pricked and found that he couldn’t resist the opportunity and decided to bring at an end almost 20 years at JB Hi-Fi.
The money now being thrown at Mr Murray by billionaire Mr Lew also helped.
It is estimated that Mr Murray’s total package including sign-on bonuses, options, wages and other performance benefits will mount to just over $42m over six years. He will receive a fixed remuneration of $2m a year at Premier Investments, a sizeable raise on his $1.35m fixed pay at JB Hi-Fi, as well as 200,000 performance rights as a once-off ‘thank you’ for signing on as the new boss. These rights will be paid over four years across four tranches and will be complemented by short term bonuses equal to as much as $1.5m. Tranches of long term performance rights to a total of 600,000 rights between now and 2027 will also line Mr Murray’s pockets.
Meanwhile, Mr Lew is keeping Mr McInnes close. Under the terms of Mr McInnes’ employment contract, Premier Investments has decided to exercise a 12- month restraint ending in January 2023 and is also entitled to exercise a further 12-month restraint through to January 2024.
The outgoing boss of Mr Lew’s Premier Investments, Mr McInnes, signalled his intention to step down earlier this year to spend more time with his young family. Mr McInnes has two children under 10, and is not at this time seeking a new corporate role. Even if he wanted to, Mr Lew is dangling some golden handcuffs with a two year non-compete clause.
Mr Murray shares Mr Lew’s more conservative, or right of centre, political views. Mr Lew has been a long outspoken critic of the Labor Party, especially during the last Federal election when he blasted the ALP’s policies while Mr Murray has deep ties to the Liberal Party.
Three years ago Liberal Party supporters and a host of CEOs gathered at the Toorak home of Mr Murray and his wife Jacqueline Blackwell to host Prime Minister Scott Morrison with Mr Murray chair of party fundraiser the Higgins 200 Club.
“Richard is unquestionably one of the best retailers in Australia, having delivered significant growth, transformation and shareholder value during his career at the JB Hi-Fi Group,” said Mr Lew on Wednesday. “Richard’s appointment continues Premier’s track record of recruiting and retaining the best executives in the industry.”
He added the appointment of Mr Murray will enable the board and senior leadership team to plan for a smooth and seamless transition.
“We look forward to welcoming Richard to our strong and committed team of more than 9,000 people. This is the beginning of a new chapter for Premier as the group continues to grow its brands both locally and globally while carefully managing through continued pandemic conditions across numerous jurisdictions.”
For JB Hi-Fi it is a return to former CEO Mr Smart. He was the former chief of JB Hi-Fi from mid-2010 to June 2014, following ten years as chief operating officer. In early 2017 Mr Murray tapped Mr Smart to run JB Hi-Fi’s newly acquired Good Guys white goods business.
JB Hi-Fi chairman, Stephen Goddard said the appointment demonstrates the “quality and depth” of the retailer’s management team.
“Terry has a proven record as one of Australia’s leading retail executives, both as CEO of the JB Hi-Fi business and more recently as managing director of The Good Guys. We look forward to him applying his considerable talents to both of the Group’s brands.”
At the same time Mr Goddard said the outgoing CEO made a significant contribution to the
company since he joined in 2003.
“During Richard’s time as Group CEO, he oversaw the acquisition and successful integration of The Good Guys business into the Group while delivering record sales and EBIT growth in the JB Hi-Fi business. We are sorry to see him go and wish him well in his future endeavours.”
Shares in JB Hi-Fi ended down $1.91 at $45.61 while Premier Investments finished up 58 cents at $26.47.
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