THE FRIDAY INTERVIEW:Nigel Blow, Chief Executive of Arnotts
IT’S WEDNESDAY afternoon and the ground floor of Arnotts is buzzing with shoppers hunting for bargains in the department store’s post-Christmas sale.
In the fourth-floor boardroom, wearing an open-neck blue shirt and black jumper, chief executive Nigel Blow is in relaxed form in spite of Arnotts having just reported staggering losses of €295 million for the year to the end of January 2010.
This didn’t take place on his watch, of course. Blow walked through the doors of Arnotts last March as a gun for hire with US consultants Palladin Capital.
Anglo Irish Bank and Ulster Bank had turned to Palladin to advise them on what to do with Arnotts and the various property assets it had accumulated during the boom to further its over-ambitious €750 million Northern Quarter project, which was heavily promoted by former chairman Richard Nesbitt.
As Blow tells it, the future of Arnotts was very much in the balance. There was a “50-50” chance at the time that the banks could have closed the doors, he says.
“The end result wasn’t certain, let’s be honest about that. There was a question mark over the business because of the magnitude of the debt, but it was very easy to see underneath it all that there was a very strong retail brand that had stood very capably on its own two feet, and then there was a property problem.”
While the property assets are now worth only a fraction of what was paid for them, Palladin decided very quickly that Arnotts could have a bright future if certain changes were made. In October, Blow was appointed as chief executive and charged with turning the business around.
“The positives where that it’s a great business,” Blow says of the 167-year old department store. “The negative was that it had probably been neglected but that was probably because the focus was on the property development. We were in a bit of a mess here.”
Last year, turnover declined by 25 per cent to €120.6 million. In the current financial year, which ends on January 31st, sales will be up about 5-6 per cent.
Arnotts’s last set of accounts show that it achieved an Ebitda (earnings before interest, tax, depreciation and amortisation) of just €117,000.
Blow won’t say what the figure will be for the current year but he indicates that it will be “significantly higher” than the €2.5 million Ebitda the group achieved in the 12 months to January 2009 – just before the recession took hold.
Sales in the crucial 24-day period before Christmas were down 5 per cent year-on-year. However Blow was relatively happy with this given the disruption caused by snow and various union marches against the Government.
“At one point we were 30 per cent behind but we managed to pull that back in the final days before Christmas,” he says.
The vast bulk of Arnotts’s loss last year related to a €248 million writedown in the value of property assets. It also made a loss of €6 million on its shop in the Jervis Centre that was to have acted as a temporary home for Arnotts during the construction of Northern Quarter. Jervis was closed.
The operating loss on “continuing operations” was €9.2 million.
Anglo and Ulster Bank now jointly own Arnotts and have given Palladin the go- ahead to return the store to its former glory.
The department store has quietly been restructured. Fifty staff left as part of a redundancy package and the management team has been replaced. New brands have been introduced into the store (including the Conran Shop, Apple and Cath Kidston), along with tighter stock control, and Blow has also changed the layout.
“There are some inconsistencies in the way the place is laid out,” he says. “Menswear is spread across two floors when it would seem to make sense to bring it all together. So we’re looking at putting it together on the ground floor.
“Part of the problem was that Arnotts was trying to be all things to all people and you can’t do that. Whatever way we go in terms of product, we want to be an authority in that product.”
Homewares and furniture is the biggest division in the company and is trading up on last year in spite of the recession.
“We have the best homewares and furniture offering in Ireland and arguably one of the best offers across the whole department store scene in the UK and Ireland,” Blow says.
On the sales side, Blow wants to ramp up its online activities. Arnotts launched its online shop in 2008 and sales are expected to double to €1.2 million this year – about 1 per cent of the overall business. Blow wants to increase this figure to 20 per cent. “I think we can do that within three years,” he says confidently.
He is also planning to launch an Arnotts loyalty card for shoppers – something he did at department store rival Brown Thomas, where he was chief executive for three years up to October 2009.
“Watch this space,” he says. “The loyalty card that BT launched was my baby and I think it’s been a success for them. It’s about breeding customer loyalty and communicating more with your customers. It’s a way of getting to know who they are and what there wants and desires are.”
When will it be launched? “The second half of 2011. These things take a bit of time to organise.”
Blow also plans to re-evaluate its shoe shop in the Stillorgan shopping centre. “We’re looking at what might work better out there,” he says. “Maybe there are other products we could put in.”
He also doesn’t rule out opening stores outside Dublin.
Arnotts regulars though will be glad to hear that the bargain basement shop in the Henry Street store will not be axed, even though Blow accepts that it’s not exactly a “logical” offering for the department store.
“That’s almost its own unique little business that we’re having to get our head around because it’s very profitable,” he says. “It’s 5 per cent of the space [of the Henry Street store] and 10 per cent of the turnover.”
Blow’s journey to the top job at Arnotts has been interesting. Born and raised in the English city of Leicester, he initially pursued a career in accountancy but “got hooked” by retail. His first job in retail was as a branch auditor with fashion group Next, which is based in Leicester.
Blow moved to London with Next taking up a post as operations manager. He had a spell with French Connection before landing a role with Harrods, the ultimate luxury department store in Britain.
He spent 14 years at Harrods, latterly as buying and merchandising director. This gave him regular contact with its former owner, eccentric multi-millionaire Mohamed Al Fayed.
“He was far and away the greatest entrepreneur I had the pleasure of working for or with,” Blow says. “The guy had an amazing business mind. He was a very instinctive retailer and trader and had a really strong vision for Harrods. I learned a huge amount from him.”
Blow was headhunted by Brown Thomas to run its Grafton Street store from the start of 2007. In October 2009, he was made redundant as the business was restructured and he was put on gardening leave for 12 months.
In the intervening period, he sold his house in London and bought a property in on the south coast of England. Then the Arnotts gig came along and Blow decided to remain here.
“I love Dublin,” he says. “I looked at opportunities over there [England] too but I got involved in the business here and really got hooked. There’s a great sense of spirit among the team to make Arnotts work.”
Much speculation surrounds the future of Arnotts. Clearly, the banks will not be long-term owners of the business. Rumours have circulated that Arnotts will become a target for department store groups such as John Lewis in England, which had signed up to Joe O’Reilly’s Carlton scheme on O’Connell Street. This is now on hold.
Can Arnotts survive as an independent retailer? Or is it inevitable that a rival will buy the company?
“I wouldn’t be here if I didn’t think it had a long-term future as an independent. I think it does. The commitment we’ve got from the banks is that they see it as a medium- to long-term play. I’ve no fixed-term contract.
“There’s a whole combination of outcomes that could happen but I’ve no reason to believe that they won’t be favourable for us and for the employees, too. And I want to be part of that.
“Arnotts is a very important brand. It’s inconceivable that you would take down the Arnotts brand and put something else in its place. I’m not here to see that happen, I’m here to grow Arnotts.”
On the record
Name: Nigel Blow.
Job: Chief executive, Arnotts.
Age: 44.
Family: Married with two daughters.
Lives: Dublin (currently house-hunting).
Hobbies: Golf and road trips with the boys.
Something that might surprise: "I've an obsession with buying and collecting limited edition polo shirts."
Something we might expect:He's an avid Leicester City football fan, having been born in the city.
