Harris' twin role at Carpetright worries City

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The Independent Online
POWERFUL City institutions are unhappy about Sir Philip Harris taking on the combined roles of chairman and chief executive at Carpetright, the carpet retailing company set for a stock market float valuing the business at over pounds 70m.

Carpetright, formed by Sir Philip in 1988 only months after he sold out of Harris Queensway, was chaired by Derek Hunt, the boss of MFI which owns 20 per cent, and has had close trading links with the carpet company. But Mr Hunt and fellow MFI director John Randall recently left the board, feeling they have enough to do running one publicly quoted company.

Sir Philip has appointed two well- respected businessmen as non-executives, but his decision to take on the role of chairman as well as chief executive is a controversial one in the wake of the Cadbury report recommendations on corporate governance.

Sir Philip has also for the first time involved one of his four children in his carpet business. His youngest son Martin, 24, works in marketing and advertising, reporting to the company's sales director.

'Sir Philip will need to justify his combined role to potential shareholders,' said Alastair Ross Goobey, chief executive of Postel. 'We certainly prefer the roles to be split, though we are not puritanical about it.'

He is not alone. 'Our normal position is that we like to see a separate chairman and chief executive,' said Dick Barfield, chief investment manager of Standard Life. One of the City's largest insurers also expressed disquiet: 'When we see the Carpetright team I have no doubt we will explore this issue.'

Sir Philip is an acknowledged genius at selling carpets. But some who remember his mixed record at Harris Queensway reckon that on his return to running a publicly quoted company he should seek an outside non-executive chairman to counterbalance his hands-on, entrepreneurial style.

Carpetright's advisers claim that the presence of Martin Harris will not raise any eyebrows. Asked whether Martin was being groomed to take over, a spokeswoman said: 'Sir Philip is only 50, so the issue of who may take over is rather a long way ahead.'

Carpetright, which publishes its pathfinder prospectus on Tuesday, has had a short, eventful career in reaching the current total of 117 shops. After two years it went through a refinancing in which MFI's original shareholding was diluted from 50 to 20 per cent. In the year to May 1991 Sir Philip's company made pre-tax profits of only pounds 351,000, but that soared to pounds 2.8m last year, and Carpetright is expected to unveil a further leap to around pounds 7m in the year just ended.

There are also signs that Sir Philip, whose family trusts control around 40 per cent, will be asking a demanding price for Carpetright, which will make its debut via a combined placing and offer for sale. The shares are likely to be offered at a price valuing them at a multiple of at least 15 times earnings.

Carpet king, page 13