Retail fighter returns to claim the shop shop
Tuesday 24 October 1995
Last year he fell foul of the board at Country Casuals, the women's clothing retailer, and left as chairman and chief executive of a company in which he holds nearly 20 per cent of the shares.
Earlier this month he decided to use his shareholding as a lever to launch an aggressive pounds 26.8m takeover bid for the company. He has already won the support of the next largest shareholder, Phillips and Drew Fund Management, with 12 per cent. And if he wins the battle, he intends to clear out the board and pay himself pounds 128,100 in lieu of a claim he has against the company for his earlier departure.
"I was quite happy to do other things until I saw the latest financial results and then I decided I had to act," he says. "I could have dumped the stock in the market, but that would have had a dramatic effect on the share price and I'm not sure I could have placed it all. Or I could have tried to organise shareholder revolts, but having looked at the numbers I decided that the best way forward was to make a cash bid."
Mr Shannon is using a shell company for the deal, Ciro Holdings. If successful, this company will buy out Ciro Pearls, another Shannon-controlled company, for pounds 1m. As a result of this deal Mr Shannon would receive more than pounds 450,000 in cash.
Mr Shannon meets visitors in an office above a Ciro jewellers' shop in New Bond Street in London's Mayfair, where he talks freely about a career that has not been short of controversy or movement.
He started in the motor industry as a graduate trainee at Automotive Products. He moved to Yorkshire to work for AE Group supplying car components but left two years later after a disagreement with his boss over computer systems.
Then he moved on to retailing with a job at Stylo Barratt Shoes and from there to Phildar, a French company that specialises in knitting wool and handicraft products.
In 1983 he was offered a job at Laura Ashley as development director to help it towards flotation. After four years he left following another disagreement with a main board director. Mr Shannon wanted to develop different strands to the business, such as menswear, but the board disagreed. He went on to work for the fashion designer Katherine Hamnett, while Laura Ashley went into the doldrums.
The Katherine Hamnett job, where he was to help decide on strategy, was barely past its induction phase when it was interrupted. He says Moss Bros, the clothing retailer, approached him through head-hunters to run the company as chief executive.
He resigned from Katherine Hamnett and accepted the new offer, only to hear Moss Bros had bought Cecil Gee and had decided to give the top job to somebody else. Mr Shannon chased, and eventually won, compensation. All Moss Bros would say publicly was: "As far as we're concerned, John Shannon has never worked for us."
Mr Shannon set about finding a company to run. He alighted on Country Casuals, in the process of being sold by Coats Viyella. He collected a management team, gained the backing of Bank of Scotland and a few other financial partners, invested pounds 75,000 himself, and succeeded with a pounds 12.5m bid.
The new team restructured the business, disposed of some freehold properties, sold the credit card debt and put in new computer systems. Mr Shannon says the main problem with the collection of designs was that it was too frumpy. The group's image was standardised, with the help of Michael Peters Design Group, and for a while things went well.
The management team bought a 50 per cent shareholding in Oasis and at one stage planned to float both Country Casuals and Oasis at the same time. In the event, Country Casuals floated in 1992, putting a pounds 4.5m valuation on Mr Shannon's stake, and Oasis had to wait until this year to float. (Oasis, in which Mr Shannon has a 7 per cent shareholding, is now worth three times as much as its former dominant partner).
Country Casuals went on to buy a company in Birmingham, House of Lerose, and to start Elvi, a brand name for larger women. "We saw this as an opportunity," says Mr Shannon, who claims there was only one competitor truly marketing to the 40 per cent of women in the UK of size 16 or more.
Elvi was launched on to the market at the end of 1993 but Mr Shannon says "in hindsight" it did not work. Women turned out to be reluctant to spend on high-quality large size clothes, preferring to buy cheaper clothes as a stop-gap until they lost weight. Elvi moved further downmarket but the project, says Mr Shannon, played a part in his departure.
The crunch came for Mr Shannon when he and the board could not agree on the length of a new service agreement. He asked for a two-year contract and was offered only one year.
It became an issue of whether the board had confidence in him and when it seemed clear they did not he left. "Eighty-seven per cent of company directors had three-year contracts at this time and even somebody who had taken over the running of Elvi was put on a 19-month one," he says.
The current Country Casuals board members blame Mr Shannon for some of their problems and feel they are better off without him. He plays down stories of bad feeling. "I see most of them a number of times a year. But if I get the company back none of the board will stay." Given that what he offers shareholders now is cash and a way out of their investment, the issue for them is whether the company is making substantial progress, as it says it is, or whether they agree with him that Country Casuals "is going backwards, not forwards".
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