Furniture retailer JD Group appointed Peter Griffiths as executive director for its ailing retail division yesterday in the wake of restructuring that will result in job losses.
This comes amid reports earlier this week, confirmed by the SA Commercial, Catering and Allied Workers Union, that the retailer had recently initiated a third tranche of retrenchments for this year, mainly at head office and warehouses.
Griffiths will be responsible for the “reconstituted” furniture retail business, the consumer finance operations and supply chain services. He is the former chief executive of the biggest local furniture manufacturer, Bravo Group, formerly owned by Steinhoff, the parent company of JD Group.
“If they are bringing in Peter Griffiths they must know they need a heavy-hitter to fix things. It’s a tough job to correct the ship while the environment is extremely tough,” said Jean Pierre Verster, an analyst at 36One Asset Management.
He said it had been evident for a while that the group was “bleeding”, stemming from a “failing company strategy“. He added that JD Group had grown its unsecured lending at the worst time, when the rest of the market was pulling back, and had not consolidated business on time.
The furniture industry has been negatively affected by the pullback in unsecured lending and a decline in sales as cash-strapped consumers are more cautious with spending.
“It never tried to get synergy between its different brands,” he said.
The portfolio of the retailer includes furniture chains such as Joshua Doore Russells, and Barnetts, electronic stores such as HiFi Corp and Incredible Connection and building materials supplier Timbercity, among others.
The retailer said: “In line with the group’s strategic focus to reduce the cost base and complexity in the business, thereby enhancing efficiencies, it has restructured its furniture retail business into four clusters dedicated to the specific consumer/market segments they serve.”
The company has had a senior management restructuring as executive director of finance and corporate affairs Ian Thompson resigned in June. In February, Grattan Kirk resigned as chief executive.
Verster said revenue was stemming mostly from the financial services rather than the core business of furniture sales and that this made the group more vulnerable to the unsecured lending pullback.
JD Group was unavailable for comment at the time of going to print.
The share price closed up 2.36 percent to R32.50 after hitting an intraday high of R32.94.