Prize catch for Lovisa as retail billionaires’ poaching season hots up

Is it rabbit season or duck season? It’s certainly poaching season among the two biggest retail rag trader billionaires, Solomon Lew and Brett Blundy, who are scouring the retail landscape for prized executive scalps.

But it was Blundy who scored big this week, bagging Smiggle boss John Cheston, who isn’t just any old retail executive, but the man credited with the operational success of the kids’ stationery group controlled by Lew.

Brett Blundy and Solomon Lew are two of the country’s highest-profile retailing billionaires.Credit: Nic Walker, Eamon Gallagher

And how about that timing? Smiggle is on the cusp of its own separate listing, so losing the person who was to helm its progression to a standalone retailer was a particularly bad break for Lew.

Poaching Cheston feels more like a declaration of retail war.

Blundy isn’t a household name outside business circles, but is nonetheless one of the most successful retailers in the country, with wealth estimated at more than $3 billion. Over several decades, he has been behind many of the country’s best-known brands, such as Hype, Platypus, Adairs, The Athlete’s Foot, lingerie outfit Bras N Things, and discount clothing chain Best&Less.

He has now headhunted Cheston to run Lovisa – the value-end jewellery retailer which has found remarkable success lately under the stewardship of Victor Herrero. The outgoing Herrero hit the headlines last year after pocketing hefty performance-linked bonuses that made him the second highest-paid executive in Australia, with annual remuneration of nearly $30 million.

Poaching Cheston feels more like a declaration of retail war.

His package was way outside the bell curve, and made even more bizarre given Lovisa boasts a market capitalisation of only $3.9 billion.

Herrero’s pay deal was voted down three years running by minority shareholders but defended by Blundy. However, until Herrero departs in May next year, he will operate under a revised remuneration deal in which he will earn a base salary of $1.9 million with no short-term incentives.

Lovisa will pay Cheston $2.35 million in base pay with the opportunity to make the same amount in short-term incentives each year.

Blundy declared a move to turbocharge a global expansion earlier this year – key to which was picking up Lew’s former executive and rainmaker, Mark McInnes, who was released from two-year imposed executive stasis in January after leaving Lew’s Premier Investments.

McInnes sat above all Premier’s retail brands, including Smiggle, Peter Alexander, Dotti, Jay Jays, Jacqui E and, as such, had worked closely with the heads of the brands, including Cheston. This explains why McInnes will be seen as something of a stalking horse for Blundy, and a particularly useful one picking up Lew executives.

Before announcing plans to join Blundy, McInnes was widely viewed as the favourite to replace John King as chief executive of Myer, which is now ostensibly part of the Lew empire, given his stake has moved above 30 per cent.

While McInnes was clearly in contention for Myer, the smart money says that his remuneration requirements were too rich for the department store. Former Qantas loyalty boss Olivia Wirth landed the job of chief executive and (controversially) chairperson of Myer.

Cheston’s defection to Blundy comes at a particularly bad time for Lew, who has already announced plans to demerge Smiggle from Premier and establish a separate listing as the brand continues its global expansion.

The Lew camp on Monday dismissed any notion that the Smiggle demerger timetable could be in jeopardy and emphasised the team effort within the brand.

The sharemarket was a little less enthusiastic about the changing of the guard at Smiggle and at Lovisa. The announced departure of Herrero prompted a 9 per cent plunge in Lovisa shares, while Cheston’s exit pushed Premier shares down almost 4 per cent.

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