Hanging on by his boot-straps

PROFILE : Liam Strong Sears' chief executive has one last chance to repair his reputation in the City. Richard Halstead reports
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The Independent Online
THESE are dark days for Liam Strong. The chief executive of Sears, the Selfridges to shoes conglomerate, has had the words "troubled" and "embattled" appended to his name for what seems like an eternity.

If, as appears likely, he steps down after steering Sears through the final stages of its tortuous restructuring process, he will look back on five years of hard graft and wonder how all his labours could not make up for the missed opportunities, the blown deals and the sadly sagging share price, which has tumbled from 129p in 1993 to close at 76.5p on Friday.

So what has gone wrong? Until he joined Sears in 1992, Mr Strong's career appeared to be more or less on course for high achievement. Raised in County Tyrone, Ireland, where his father was the lorry fleet manager for the local milk marketing board, Strong attended the village school, then Portora and finally Trinity College, Dublin.

He then spent 14 years at Procter & Gamble UK, working on household brands like Ariel and Fairy Liquid, and then a further 15 years at Reckitt & Colman, where he rose up the marketing side of the organisation until he was made president of Durkee French Foods in 1984.

From there he went to British Airways, where he was the marketing director during the "dirty tricks" years between 1989 and 1992, when the airline was doing all it could, legitimately or otherwise, to thwart the efforts of Richard Branson's Virgin Atlantic airline.

The association did not spoil his chances of a top job, however, and in 1992 he was headhunted by Sears.

At 47, he was one of a new generation of chief executives, like Gerry Robinson at Granada, of whom great things were expected.

Indeed, Strong started well. An avid fan of deal-making, he seemed ideally suited to the job of leading a sleepy organisation into the 1990s.

"I would stand about for hours negotiating the best deal for cattle or cars," Strong recalled in an interview with this newspaper two years ago.

One observer cast a different light on his negotiating skills: "He had two principles: never name your price first and never be ashamed to shock people with how outrageously you pitch it first time round."

He is also a military history aficionado, enjoying the decisiveness and innovative behaviour of commanders such as Ulysses Grant. "Success", as he once said, "depends on how radical you can be."

Unfortunately, this knack for a good deal - or even a good military strategy - appears to have deserted Strong at his time of need.

A succession of botched deals have blighted his time at Sears. These started with the sale of the Olympus Sport retail chain to Philip Green for pounds 20m, half the net asset value.

However, particularly disastrous was the sale of 380 shoe shops to Stephen Hinchliffe's Facia group in 1995.

The Hinchliffe deal incensed the City. When the Facia retail empire went into receivership last summer, it transpired that Mr Hinchliffe had not actually paid anything for the businesses, and Sears remained liable for many of the store leases and employee wages. The collapse of the Hinchliffe empire cost Sears pounds 80m in provisions and charges, and led to calls for the resignation of both Strong and his finance director, David Defty.

Then there has been the continuing shenanigans over the catalogue company Freemans, which Strong announced would be sold last December and the pounds 400m proceeds returned to shareholders.

What followed was a series of false starts with potential buyers Littlewoods, Otto Versand and N Brown. As yet, the business remains unsold and the price is dropping all the time.

The vitriol from the Square Mile - never a charitable place - has been unprecedented.

"He should go. He should go now. He has destroyed shareholder value, and until he goes he will continue to do so," was one leading analyst's unequivocal verdict.

More circumspect observers put Strong's problems at Sears down to his being the wrong man in the wrong job at the wrong time. "Sears needed a hatchetman, and instead it got a nice guy who knows a lot about marketing but not very much about how to play hardball in deals or close businesses down," said one. "The company needed a bastard, and Liam just wasn't a big enough bastard."

Last week, Mr Strong was observed laughing and joking at a City function. If there was pressure, he certainly wasn't showing it. And indeed within the corridors of the Sears headquarters building, which backs on to the flagship Selfridges department store, things appear calm.

Strong still enjoys the support of his chairman, Sir Bob Reid, who has developed a reputation for deflecting the most virulent criticism in his long career as a Shell oilman in Nigeria and Iran, and then at British Rail in the years leading up to privatisation. Sir Bob has gone on the record several times in the last four months expressing faith in his chief executive - and put his own job in jeopardy as a result.

It is perhaps worth noting that Mr Strong still has friends in the City. While other institutional shareholders have made no secret of their impatience with the Sears management - one has gone as far as hiring headhunters to approach possible successors - PDFM, the largest shareholder in Sears, has so far not joined the chorus of disapproval. But how much longer that can last is open to question.

Strong also appears to have the non-executive directors on his side, though the resolve here is also questionable.

None would comment on the record this week, citing the impending results announcement. But their support, while welcome at the time, may only have contributed to the City's growing disenchantment with Mr Strong.

In light of this, it is ironic to note that Mr Strong's continued presence at Sears, thanks to the backing of his board of directors in the face of a concerted City and media campaign to unseat him, is allowing him one more chance to pull the rabbit from the hat - to do the deals that need to be done and escape with some credibility intact.

The realisation, perhaps too late, that radical action is indeed needed, and fast, has spurred Mr Strong to cobble together a widely reported but as yet unconfirmed plan to break up the different businesses.

After the Freemans sale, which is still in question now the proposed deal with Littlewoods has once again been referred to the Monopolies Commission, Mr Strong will attempt to cut the knot with the British Shoe Corporation, either by selling it off on the cheap to an adventurous venture capital house (Kohlberg Kravis Roberts has been mentioned) or closing it down completely at a cost of up to pounds 300m.

What would remain after this pruning is Selfridges and some womenswear shops, which could be sold to an ambitious retailer - Dickson Poon, chairman of Harvey Nichols, perhaps - and the proceeds returned to the long-suffering shareholders.

Thus would Strong have worked himself out of a job. He would then be free to turn his attentions elsewhere.

At only 52, he still has career possibilities in front of him, though it is unlikely that a quoted UK company would be applauded for hiring him. Headhunters suggest that there may not be much for Strong in the UK, but a man of his experience and marketing nous could be well used abroad - say in the Middle East, where a few years on a six-figure tax- free salary would be a welcome relief from the pressure cooker of Sears. He may have the chance sooner rather than later.