A handover from a business founder to a family member normally involves continuity.
So Michael Murray see you in may as managing director of Frasers, the luxury sportswear group, was an anomaly in two respects. He was a step-parent, not a bloodline. And the transfer came with a mandate for change rather than business as usual.
“When I became CEO, there was only one path: the news,” says Murray, 33.
Frasers was founded by Murray’s father-in-law Mike Ashley as a one-stop sports shop in 1982. It had been spun off into a listed company with £4billion in annual sales by a tight-knit group of longtime associates. “The company was built by people who started in the shop, in the warehouse or in truck driving,” adds Murray.
But in recent years, there was no road. The UK sportswear market seemed increasingly saturated and overseas forays had yielded mixed results. In terms of share price performance, it had been beaten by rival JD Sportswhich benefited from privileged access to the latest footwear innovations thanks to its best relations with partner brands.
Sports Direct, as Frasers were once known, has also been plagued by controversy after revelations about deplorable working conditions at its logistics center in Shirebrook, and often had strained relations with the City.
Murray, the son of a real estate entrepreneur, who met Ashley’s daughter Anna on vacation in 2011, initially focused on the company’s real estate strategy through an unusual program – and lucrative – advice arrangement. But while Ashley’s mastery of logistics and shopkeeper’s mentality allowed him to make a fortune selling four pairs of socks for £5, he was shrewd enough to see that the neat and confident young Murray , included the attractiveness of brands and how to market them to ambitious customers.
He became the driving force behind a strategy known as ‘elevating’: replacing cluttered stores, entry-level own brands and garish ‘mega value’ signage with sleeker, higher outlets. range featuring the most expensive new products from Nike, Adidas and Under Armour. .
It required what Murray describes as “a complete 360” in how Frasers interacts with brands. “It used to be very transactional – how much can you buy it, how much can you sell it? Now there’s a whole go-to-market strategy: where should we open stores, what should -they look like, what the Christmas campaign should look like . . . ”
This necessarily made the business more complicated to manage. “We need to open our arms to a more diverse workforce, people with different skill sets – digital, marketing, data science, IT,” he said.
It’s been key for the old guard, people like Karen Byers who left in 2019 after three decades of working for Ashley. But the influx of young managers like Ger Wright, recently hired at Nike to manage sportswear, or the promotion to general manager of David Al-Mudallal, who was still in school when Ashley launched Sports Direct in 2007, highlight the generational change.
Perhaps the most dramatic moment came in late September, when Ashley himself said he leave the board after the company’s annual meeting in October. “It is clear that the group has the right leadership and strategy in place, and I am very confident to hand over to Michael and his team,” he said in the statement announcing the change.
Murray insists he doesn’t want to completely throw out the culture of Ashley’s decades. “One thing I would like to keep is the old band’s work ethic and the attitude of getting things done, not deliberating, not planning for six months before doing anything. “. He readily admits to being “very ambitious” and has never denied his interest in the top job. But when the time was right, he says it “happened organically.”
“It got to a point where Mike thought it was time to hand over the reins to me.”
So it was Ashley’s decision? “Yeah. He saw the results across the business and said look, we’re coming out of the pandemic, crisis management is over, it’s a nice transition at this point. If you’re interested , take over. Part of his motivation was his realization that the retail business was changing. But according to Murray, Ashley never wanted to be general manager and reluctantly accepted the role when Dave Forsey resigned in 2016.
Although he is stepping down from the board, Ashley is still the majority shareholder with a 65% stake, and few people think that at 57 he will retire to the golf course or the non-executive circuit. . Is there a driver in the back, as skeptics predicted? Murray says he and Ashley “don’t agree on as many things as we agree” and that “you only see a fraction of what we do, that’s what we stand on.” OK”.
But he also insists he is in the driver’s seat, citing the recent sale of Frasers’ minority stakes in US chains Bobs and Eastern Mountain Sports, which he viewed as non-core. “He’s making his case, I’m making mine – but ultimately when I become CEO, the final decision is mine,” he says.
When he’s not visiting sportswear suppliers and brands, or checking out new or refurbished stores, Murray spends much of his time at the group’s London offices on Oxford Street – a building he oversaw the purchase in 2016. It’s well documented that the deal initially left Ashley, who is spending more time perfecting the logistics machine he created, somewhat perplexed.
“[Academy House] is the brains, Shirebrook is the engine,” is how Murray sees it. “You have to be in London to acquire certain talents and skills. You need to be in London to connect with the biggest third-party brands when their CEOs are on the go.
Murray believes his long apprenticeship outside the company has put him in “a very privileged position” to take on the top job. “I had the chance to test and learn along the way without the pressure of being a CEO,” he says, which allowed him to “start with a very strong strategy without being thrown to the bottom.”
In his eyes, it has also given him a riposte against any accusations of nepotism, although he says the issue has not arisen so far. “I wanted to prove myself before I started. . . It’s not easy to fit in with my relationship with Mike, so I wanted to have evidence, results, accomplishments under my belt.”
Three questions to Michael Murray
Who is your leadership hero?
I greatly admire and respect Bernard Arnault, President and CEO of Louis Vuitton Moët Hennessy. Its record of increasing brand desirability and profitability in the luxury goods and services sector has been incredible.
What was your first leadership lesson?
Leading by example to build trust quickly is critical to the success of any business strategy.
What would you be doing if you weren’t running Frasers?
Given my experience in real estate development and investment, I would probably run my own real estate company.
Murray also revamped external communications, appointing a top PR firm and promising a reset of relations with sellside analysts in particular.
Internally, he says he wants to ensure that the group’s 27,000 employees have a better idea of the strategy. “We communicate monthly to all staff. If there was an acquisition, we explain why,” he says. “Our results get a lot of media attention and employees may not understand what the financial goals are, so I talk to them about it.” Although it didn’t have a conventional executive incentive plan for years, Frasers always rewarded shop personnel for superior performance. A long-term “Fearless 1,000” program based on share price performance was completed under Murray’s watch with a monthly reward, where 12 employees receive an additional month’s pay.
September saw the first “Frasers Festival”, a gathering of 1,000 employees and 500 suppliers and other partners. Insiders say the changes are having an impact. “He often visits offices and stores, which people love because they can talk to him personally,” said one, adding that Murray’s social media presence was also felt. His posts on Instagram and LinkedIn regularly attract hundreds of interactions, many of them employees.
“The management team was not far from the workshop before, but [Murray] breathed new life into retail staff engagement,” the employee says.
The group’s performance in recent months will have done no harm to its cause. As shares of many other general retailers fell as investors worried about pressure on consumer incomes, a particularly confident outlook statement with full-year results in July, Frasers’ stock rose sharply. It’s still up around 8% since Murray took over, and the company was offered a somewhat fortuitous route to the FTSE 100 when it replaced Meggitt, an aerospace group that took up an offer purchasing public.
Tougher tests are undoubtedly ahead of us. This winter is expected to see an unprecedented squeeze on income in the UK, by far its largest market, which could challenge Murray’s bullish forecast. He will have to decide what to do with up to a dozen House of Fraser stores that remain barely profitable despite substantial reductions in their rental costs.
But Murray can rejoice in Lord Simon Wolfson’s experience at Next. Amid whispers of nepotism, he was named executive director of Next in 1997, when his father was still chairman of the company. At the time, Murray was seven years old.