Opinion
Is this what revenge looks like in retail billionaire land?
Elizabeth Knight
Business columnistThe latest casualty of the warring retail billionaires Solomon Lew and Brett Blundy seems to be the head of Smiggle, John Cheston. It’s a retaliatory mud wrestle, and it’s only getting started.
In rarefied big business circles, this is what a drive-by looks like.
Solomon Lew (left) with John Cheston, in happier days.Credit: Palani Mohan
No other rag trader is more successful or plays harder and smarter than Lew. And while Blundy isn’t a household name outside business circles, he is nonetheless one of the most successful retailers in the country, with wealth estimated at more than $3 billion. Over several decades, he has been behind many of the country’s best-known brands, including Hype, Platypus, Adairs, The Athlete’s Foot, lingerie outfit Bras N Things, and discount clothing chain Best&Less.
Three months ago, Cheston was poached by Blundy to run one of his major retail brands, Lovisa, and had been serving out a year’s notice at Lew-owned Smiggle.
On Monday, Lew’s Just Group shocked the industry with a one-line statement announcing it was terminating Cheston immediately after he had, “engaged in serious misconduct and a serious breach of his employment terms”.
No one from the Lew camp was willing to expand on what this alleged misconduct involved, and Cheston wasn’t answering his phone – presumably he was packing his cardboard box with photos and pot plants, and briefing his legal team, spearheaded by high-profile defamation lawyer Rebekah Giles.
On Monday, Giles released a statement saying: “The allegations of misconduct are categorically denied by Mr Cheston.”
Cheston’s poaching was particularly troublesome for the Lew empire, given he was credited with a large part of the success of building and expanding Smiggle – the stationery brand known for its fluorescent backpacks and water bottles that has captivated kids on four continents.
On the back of global colonisation, Smiggle is being primed for its own stock exchange listing, so the defection of its long-standing chief executive to Lovisa appeared to be a major blow for Lew’s Just Retail group.
Cheston’s poaching was particularly troublesome for the Lew empire given he was credited with a large part of the success of building and expanding Smiggle.
If that was the case, the Lew camp had been playing it down, suggesting there was plenty of time to find Cheston’s replacement.
There had also been rumours swirling around that Cheston had lobbied unsuccessfully to be the head of Just Retail and to take the position of chief executive of Myer, in which Lew’s Premier Investments is the largest shareholder.
Sacking Cheston is a big swing by the Lew camp and will have serious ramifications for his ability to lead Lovisa, which is an ASX-listed company.
The allegation of any kind of “serious misconduct” would surely need to be contested by Cheston before taking up the role at Lovisa.
Lovisa had undertaken to pay Cheston $2.35 million in base pay with the opportunity to make the same amount in short-term incentives each year.
Smiggle is being primed for its own stock exchange listing.Credit: Louie Douvis
Meanwhile, the fingerprints of former Lew lieutenant Mark McInnes might be discernible in a forensic analysis.
He retired from the Lew empire a few years ago, and after his golden handcuffs were unlocked, he was lured to Blundy’s sprawling investment outfit BBRC as global head of retail and consumer.
McInnes left Just Retail after a decade. The simpatico relationship between Lew and McInnes had spawned one of the most successful retail stories in history.
Ironically, Lew scooped up McInnes following a sexual harassment claim that cut short his career as head of David Jones. McInnes denied the allegations, and a civil matter was settled outside of court.
It was a punt for Lew that paid off in spades.
The sacking of Cheston overshadowed the less headline-grabbing news from Just Retail – an update on the group’s trading performance in the 2024 financial year – one that investors would deem disappointing rather than surprising.
Sales for 2024 will be slightly below that achieved in 2023, in a discretionary retail environment that has left most in the sector challenged.
The performance update punished Premier Investment’s share price, which was down 4.5 per cent by lunch.
But it is the announcement on Cheston that has captured the attention of retail and governance experts.
We are now hanging out for the next episode.
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