Smiggle executives resign ahead of demerger

As Smiggle, owned by billionaire Solomon Lew, steams towards a possible demerger in January, three of its most senior executives have resigned to follow sacked CEO John Cheston out the door.

Former Smiggle CEO John Cheston, whose resignation and then sacking has seen other executives follow. Picture: David Geraghty, The Australian.

Three key executives from billionaire Solomon Lew’s stationery chain Smiggle have resigned following the resignation - and later sacking - of Smiggle boss John Cheston, leaving the retailer bereft of important and senior managers just as Mr Lew considers demerging the business into a separate listed company.

Smiggle has now lost three more important executives, The Australian can reveal, who have followed Mr Cheston out the door and who are believed to have tendered their resignations soon after Mr Cheston initially told Premier Investments in June he would be jumping ship to jewellery store Lovisa.

The Smiggle executives who have tendered their resignations are its global head of retail operations, Chantelle Hayes, global marketing manager, Emma Fulford and global head of sourcing and product, Chelsea Brunsdon.

These executives have been with Smiggle for decades and along with Mr Cheston formed a tight group of managers of the stationery retailer, guiding it to its strong earnings growth and push offshore into markets such as Britain, the Middle East and south-east Asia.

These three executives are still currently at Smiggle and working through their final nine months at the business, with Smiggle now looking for new managers to take their roles. The key marketing, sourcing and retail operations executives were believed to be particularly close to Mr Cheston and wanted to leave the business when it was revealed in June that Mr Cheston had accepted the CEO role with Lovisa, which is chaired and controlled by another billionaire retailer, Brett Blundy. Mr Cheston was still at Smiggle, working through 12 months notice.

Former Smiggle CEO John Cheston. Picture: David Geraghty, The Australian.

However, their decision to resign when Mr Cheston did in June came before Premier Investments then announced this month that Mr Cheston had been sacked for unspecified workplace misconduct, described in a brief press release as “serious misconduct”.

On Tuesday Premier Investments said that Mr Cheston had also forfeited 113,550 in performance shares, valued at around $3.8m, saying that the former CEO was “in breach of obligations to the Premier Group”.

The loss now of four high-ranking Smiggle executives comes as Mr Lew’s Premier Investments, which owns Smiggle as well as Peter Alexander and a portfolio of retail apparel brands, is set to unveil its full-year results on Wednesday and where it could provide an update of the plans to demerge Smiggle as early as January and Peter Alexander later next year.

However Smiggle, the funky kids stationery chain with more than 300 stores and $320m in annual sales, is now steaming towards a possible demerger within the next four months without Mr Cheston, its long-serving CEO who was sacked, and three other senior executives.

Premier Investments is currently looking for replacements but the exit of so many key executives so close together could concern investors and analysts as they size up a Smiggle demerger.

The surprise sacking of Mr Cheston earlier this month came after more than a decade running Smiggle, and after The Australian revealed leaked documents that showed Premier Investments’s apparel brands had booked worsening sales and earnings in the second half due to tougher trading conditions.

Premier Investments chairman Solomon Lew and interim CEO John Bryce. Photographer: Louis Trerise

No clear reasons were given by Premier Investments for the sudden sacking of Mr Cheston, who has signed on to run the ASX-listed Lovisa where he will be rewarded with a fixed remuneration of $2.35m a year along with almost $10m in short-term and long-term bonuses from 2025 to 2027.

The possible demerger of Smiggle and Peter Alexander comes as Premier Investments also considers selling its retail apparel brands - Portmans, Jay Jays, Jacqui E, Just Jeans and Dotti - to Myer. This could eventually leave Premier Investments with a large war chest of cash, a rich pool of franking credits, a large equity stake in kitchen appliances Breville and a new life as a listed investment company or conglomerate with interests in a number of operating businesses and assets.

Mr Lew could be in line for a potential $500m payday as part of a wider $1.3bn wealth uplift for Premier Investments shareholders if a break-up of his fashion empire is forged to unleash the superior growth potential of its potent retail brands Peter Alexander and Smiggle.