It’s the headache David Jones didn’t need.
As the department store battles retail sector challenges and rolls out its Strategic Direction Plan, its chief executive pulled the pin.
Paul Zahra cited personal reasons for stepping down as CEO of the high-end department store chain.
The announcement that he would leave the company was made after the Australian Securities Exchange had closed late Monday.
Shares in the retailer dropped more than two per cent in early trade after the stock exchange opened today before closing six cents down at $2.79
Zahra will remain at the helm, with the board’s support, until a successor is chosen.
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His shock resignation comes only three years and four months after Zahra replaced Mark McInnes after a high-profile sexual harassment scandal.
“Whilst much has been achieved and the company is well placed for the future, I believe it’s time for a change for me personally,” Zahra said in a statement.
David Jones chairman Peter Mason said Zahra would leave the retailer in a solid financial position.
“I thank him for his contribution as CEO,” he said.
“I look forward to working with Paul to ensure a smooth transition of his role to his successor.”
But Morningstar Equities analyst Tim Montague-Jones said Zahra’s resignation will disrupt the business, which only last year began a “future strategic direction plan” to cut costs.
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“Unfortunately, I don’t think he’s been there long enough to actually see any fruits of all his initiatives that have been implemented,” he told AAP.
“The business is still struggling. It started to struggle when he arrived and it’s still struggling now, but it’s more a reflection of the cyclical conditions – the retail market has been suffering since he joined in around 2010.”
David Jones made an underlying profit of $101.6 million in the year to the end of July, a slight increase from the previous financial year but a far cry from $170.8 million in fiscal 2010.
Total sales, however, fell by 1.2 per cent as online retailing continued to threaten traditional department stores.
In a statement, David Jones said Zahra came to the top job “facing a range of difficult issues” without mentioning McInnes’ resignation three years ago, following a sexual harassment complaint from a 25-year-old female junior publicist.
“He has successfully guided the company through the aftermath of the global financial crisis and a challenging retail environment and led the future strategic direction plan, which is well into implementation,” the company said.
Zahra thanked David Jones for giving him the opportunity to lead it after 15 years with the company, including a stint as the general manager of visual merchandising.
“David Jones is an amazing company and a brand I have always been proud to be part of,” he said.
“I am sincerely grateful for the opportunities I have had and believe that I have made a valuable contribution.”
David Jones shares had risen by two cents to $2.85 ahead of the resignation.
