ZAHRA'S THEME

Ky Chow, Sky News Business Reporter

8 December 2011

Paul Zahra polished off almost his entire bottle of water while we were talking - and that was before we'd even begun the interview.

The nerve were understandable. Besides skipping every television interview request this year, it's hard to think of a retailer more starved by the Great Australian Consumer Hibernation, and damned by retail analysts for not moving with the times.

The real heatseeker on Wednesday, however, was a Financial Review cover article bulging with critical comments unleashed that morning by his predecessor Mark McInnes. After 18 months, the Just Group boss finally named names, saying Zahra has "rewritten history" by blaming him in a BOSS magazine article for (amongst many other things) closing David Jones' online shop in 2003 (which McInnes would reopen in 2009). McInnes also brought the thunder against Zahra for losing staff and brands.

As we squeezed through the lunchtime rush in the Elizabeth Street store, Zahra stayed true to his policy of never criticising or even mentioning McInnes by name, saying says he's got bigger problems to deal with than a media to-and-fro. Yet he would leave his views on some of McInnes' comments in little doubt.

The current CEO dismissed McInnes' claim that losing senior David Jones staff had hurt Zahra's ability to predict sales and thus stranded him with far more aged inventory than McInnes ever had to deal with. Unprecedented circumstances and events were to blame, Zahra retorted, and losing nine senior staff in an 18 month period was normal business. Sometimes it was just time for staff to move on - and it was better for everyone. Zahra skirted my question, however, about whether the David Jones brand was back to pre-McInnes scandal levels, only saying he was focused on the future, and the company was still a great one.

And "like staff", Zahra says it was sometimes time for brands to move on too, including Sass and Bide. He says its replacements in the David Jones stable had more than made up for its departure.

McInnes had also defended his decision eight years ago to close the online store, telling the Fin there weren't too many other options for a $28 million loss maker, dismissing Zahra's wistful comparison to the patient Nordstrom chain. Zahra, however, insists Nordstrom is still an excellent yardstick for his store, though he acknowledged the online world had changed substantially not just in the last year, but even the last six months.

Gesturing past the store's baby grand to the white Christmas decor covering Makeup and Cosmetics, Zahra also stressed that despite the online revolution, 90% of shopping is still done in a store where people can touch and feel. A multi-channel strategy may seem a comfortable fence to sit on - but Zahra says he's comfortable with the pricey new store rollouts, given he has "only" 36 stores, which is a long way from saturation.

As another credit crunch waits on the other side of the New Year, Zahra is also confident the company's Financial Services (read: American Express credit card partnership) will stay profitable. While the big banks may have started issuing Amex cards of their own, he's confident the in-store benefits will be more than enough to keep his version strong.

He's also bullish on Christmas sales, saying two consecutive Reserve Bank cuts has made a significant difference to sales that had already been lifting in October and November. Sure Europe worries customers - but that had already been baked into their moods.

Ending the interview on a positive outlook for sales, (and your correspondent's charm and skills) had Paul Zahra at considerably more ease than when the grand pianist first took his break. "It's beginning to look at lot like Christmas" floated after Zahra on his way back to the lift, and he hopes it'll be a silent night from Mark McInnes from now on.

Watch the full interview here: http://youtu.be/L-HAC4twqPE

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