Waterstone presents WH Smith's new head with a baptism of fire

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The Independent Online
Richard Handover, the new WH Smith chief executive, has already had to cope with a restructuring approach from Tim Waterstone, the company's own demerger announcement and criticism that he is not the right man for the job. And all in his first couple of weeks.

But as Nigel Cope, City Correspondent hears, he still has to convince institutional shareholders that he can steer the group into calmer waters.

Richard Handover is little more than a fortnight into the job as chief executive of the troubled retailer WH Smith and it is no surprise that he is looking a little crumpled. His face is etched with deep lines not really commensurate with his 51 years. His rather un-CEO-like blue and yellow checked shirt is coming untucked at the back. And when he walks across the room you can see there is a small hole in the seat of his trousers. With his gaunt looks and stooping gait he looks more like your old geography master than a man charged with one of the most difficult jobs in UK retailing.

Such has been the ferocity of criticism of both him and his company and such has been the frenzy of activity at Smith's London head office that he could be forgiven for feeling exhausted, though he will not admit it. "I feel good, full of energy and am keen to get on. It's been an amazing couple of weeks and a steep learning curve."

It has certainly been a baptism of fire. Mr Waterstone launched his surprise restructuring proposals before Mr Handover had even taken over in the hot seat vacated by Bill Cockburn. And on his third day in the job the WH Smith board made its first hasty rebuttal of the Waterstone plan.

Since then Smith's has been a whirlwind of activity, culminating in its decision on Thursday to break itself up with the demerger of the Waterstone's bookselling business and the sale of the music operations including Virgin- Our Price. And ever since his appointment he has had to put up with carping that he only got the top job because Smith's couldn't find anyone else. Not bad for his first 17 days in office.

But he is an amiable man and is taking it well. He can accept the criticism, he says, but the youngest of his three children finds it upsetting. And his 32 years at Smiths, which have included spells running Our Price records and the cash-generative news distribution business, mean loyalty is high on his list of attributes.

He is adamant there has been no U-turn in strategy at Smith's even though he said himself only last month that "we are not about to break up."

"Barings [Smith's financial advisers] was asked early in the summer to consider a wide range of financial options. But Bill Cockburn's departure put Jeremy Hardie [the WH Smith chairman] in a difficult position. He had to adopt a kind of holding pattern. As a non-executive chairman he couldn't have made an executive decision on something like that until the chief executive position had been filled. It wouldn't have been right."

He says he was committed to the idea of a restructure before he got the chief executive job. "I passionately believe it is the right thing to do and believe I have the complete backing of the board."

But he may not have the full backing of all the shareholders. One said yesterday that Mr Waterstone appeared to have a more convincing vision about how to revitalise the core high street chain and that the Smith plan has several weaknesses. The investor said he would like to know the future of the costly Swindon distribution centre, which Mr Waterstone would close, and the board's plans for the level of gearing.

The shareholder added: "One cannot help but feel that they have been bounced into this and that they are reacting to events rather than pursuing a genuine strategy. They say they discussed it in the summer. One is tempted to ask to see the board minutes."

Another said that the position of Mr Hardie was increasingly tenuous given his handling of the search for a new chief executive and the Waterstone approach. "Perhaps he is one of the divestments the board would like to make," he said.

WH Smith will find out how more shareholders, large and small feel about their ideas when they hold their annual meeting next Wednesday.

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