Whatever else he is, Archie Norman is no fool. As chief executive of Asda, he is the youngest head of an FT-SE 100 company around, so his ambition cannot be questioned. But he also has one of the trickiest jobs in British business - many in the City regard the country's fourth largest supermarket group as little better than a basket case with virtually no recovery potential. He knows that he is almost the only thing standing between Asda and oblivion.
Not surprisingly, Mr Norman thought long and hard before accepting the job when it was offered to him last year. He had a comfortable slot as finance director of Kingfisher, owner of Woolworth, which had already fought its way out of financial difficulty. Cautious by nature, he had no obvious reason to take big risks.
He had always wanted to be chief executive of a large company, however, and he was being offered a salary of pounds 430,000 plus a share options package. But even then it was not a simple decision, and the balance may only have been tipped towards Asda by the urging of Derek Higgs, director of corporate finance at S G Warburg.
Warburg was handling the company's pounds 357m rights issue towards the end of last year when it became uncomfortably aware that the City wanted nothing to do with Asda. Its solution was to find a new chief executive with enough credibility to reassure institutional investors and save the issue. It settled on Mr Norman, and the plan worked. Mr Norman accepted the job days before the rights issue went ahead. The money came in, and the City breathed a grateful sigh of relief.
The cause of his popularity in the City is his undoubted skill at investor relations. The results presentations when he was at Kingfisher were always slick and well-calculated. Analysts felt Mr Norman was open and communicative, giving them the information they needed to make their judgements about the company. This was a refreshing change from the obfuscation that analysts faced at other companies and was enough to win Mr Norman many Brownie points. The City felt that he was not only able and intelligent but trustworthy - a man who would not hide the facts if things got bad or promise more than he could deliver. Clearly, those are valuable qualities in anyone leading a company with as many problems as Asda.
Indeed, Mr Norman's command of the financial data was so complete - a result of his training at McKinsey, the management consultants - that some analysts grew a little suspicious. 'It was the typical management consultancy thing. All the information was there except the one figure you really wanted,' said one. 'Norman is like a politician when he speaks,' said another. 'He's good at saying a lot and saying nothing.'
Never the less, his techniques worked in the City. 'But it's a curious thing,' said a manager who knows Mr Norman well, 'that because he is good at investor relations, people assume he is also a good manager.'
Mr Norman's brief and meteoric career has always been heading in one direction. Educated at Charterhouse school and Cambridge University, he always seems to have been sober, diligent and somewhat old for his age despite his perennial prep-schoolboy looks. One of nature's conservatives, he took an active part in Cambridge Union politics. He went to the Harvard Business School in his early twenties. From there he took the well-worn path of business school graduates into McKinsey, where he rapidly became one of the firm's youngest partners.
In the mid-1980s, he headed a McKinsey team advising Kingfisher on group strategy. The company was impressed with him, and even more impressed by his work in helping it to fight off successfully the bid by Dixons. Shortly after this episode, Mr Norman joined Kingfisher in 1986 as finance director, effectively number three to Geoff Mulcahy and Nigel Whittaker. His contribution was to keep the company's finances on a firm footing and bring an unprecedented professionalism to Kingfisher's small central office.
To most people at Kingfisher he was an aloof and formal figure, professionally demanding but definitely not one of the lads. He was rather a young fogy, often dressing in old tweed suits and disappearing on holiday to go shooting or fishing with his Conservative friends. 'I always thought of Archie as about 10 years older than he really was,' said one who worked with him at Kingfisher. Although said to be a good cook and to have a dry sense of humour, Mr Norman is not easy to get to know.
With strong Scottish connections, he owns a house in the Western Highlands. (It is perhaps an indication that he has 'arrived' that a dispute he is having with a well-known neighbour in Scotland, Sue Arnold, made it into Nigel Dempster's diary in the Daily Mail recently).
In the late 1980s, he stood unsuccessfully as a Tory candidate in council elections at Southwark in London, where he lived with his wife and daughter. Since Southwark is heavily Labour it was a quixotic gesture. It may not turn out to have been his last.
The only question that matters now is whether he can save Asda. Some believe he is too reserved and formal to inspire the necessary enthusiasm at Asda. But according to Kingfisher's Mr Whittaker: 'If anyone is the right guy for Asda, it's Archie. He is clear and analytical and very determined. I would think people at Asda will find him a breath of fresh air.'
His supporters were disappointed when he did not turn the stumbling group inside out in his first few months as chief executive. He said later that the mess he found there was far worse than he had been led to believe and took longer to get to grips with than he had expected. He is being helped in his efforts by a small army of McKinsey men.
Six months on, however, he has started to make some moves. Presenting Asda's pounds 365m loss for 1991 last week, he blamed his problems squarely on the old management and cleared the financial decks by writing off everything that could be written off. He declared the group's strategy of concentrating on its main business of food retailing, refurbishing old stores and boosting fresh food sales.
This is what the City wants to hear, since food retailing ought to be a safe and profitable business. There should be scope for swift improvement, too. A typical Asda store, at Roehampton near London, for example, has 57 per cent of its floor space devoted to food compared with 87 per cent at the local Tesco. Its profit margins are 4.3 per cent compared with 7-8 per cent at Tesco or Sainsbury.
Yet the problems are still all but insuperable. Asda is losing pounds 25m of sales to competitors a year, and its profit margins are still failing to generate internal cash flow. Above all, the competition is not standing still. 'No matter how good its strategy, Asda can still be crucified by Sainsbury and Tesco,' one analyst said.
Mr Norman has given Asda three years to turn around. The view in the City, however, is that it will be clear whether or not he has succeeded within the next 12 months. If sales do not pick up soon, Asda's future will be back on the line. And so also, perhaps, will Mr Norman's.
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