Power shift at electrics chain

The man charged with turning around the troubled retail chain at the heart of Pacific Retail's foray into Britain has been unexpectedly replaced by his British second-in-command.

But although the PowerHouse electrical goods chain recently missed a key break-even target under outgoing chief executive Peter Halkett, its New Zealand parent was yesterday adamant he had not been dumped.

Pacific Retail chief executive Steve Smith said Halkett himself had initiated talks about his long-term future in the last few months of last year, which had led to the decision he would groom 45-year-old British retailer Chris Onslow as his successor. But when asked if he was satisfied with the British chain's performance while Halkett had been at the helm, Smith was candid.

"The answer is, of course, no, and if you ask Peter Halkett the same question he would also say no. But he's done everything to the best of his ability."

In January, the company said disappointing Christmas sales had destroyed its hopes of breaking even for the half-year.

The decision has caught at least one major Pacific Retail shareholder by surprise.

Alliance Capital Management analyst John Norling said he had expected Halkett to stay a while longer. Alliance Capital manages an 11 per cent stake in the Eric Watson-controlled Pacific Retail for institutional investor AXA.

"If you had asked me yesterday whether I thought he would be here in six to 12 months I would have said yes," Norling said. "It is a bit of a surprise but the company seems to have it in hand."

One small shareholder said the handover was "a bad sign".

"What I worry about is that they have other good businesses. You just get the feeling that all the money they earn is going into the black hole that is PowerHouse," he said.

Smith said turning PowerHouse around was "not an easy task" but Halkett had finished the first phase. That had included reopening the stores for trading and adoption of a "think local" strategy.

Onslow would take PowerHouse through a second phase focused on cost efficiencies and performance improvements.

Although Onslow has had other senior positions at British companies including Thomas Cook and supermarket Asda, he would be a first-time chief executive at PowerHouse.

Halkett said the time was right for a transition.

Smith said Halkett had indicated he would take a break and tour Britain with his family, but would stay in an advisory role for three months and remain a PowerHouse director.

But Halkett's departure is eerily reminiscent of a light-hearted remark he made to the Business Herald in January. Then, asked if he would remain in his job for the long term, Halkett joked he had just announced a half-year loss of 5 million ($13.2 million). "The board may be thinking to themselves, 'well, it's about time we changed horses'."

RESHUFFLE

* Eric Watson-controlled Pacific Retail has replaced Peter Halkett as head of its British chain PowerHouse.

* Halkett took the reins at PowerHouse after Pacific Retail paid $47 million for 134 stores in September 2003

* In January, PowerHouse said it would miss a half-year break-even target after disappointing Christmas sales.

* Halkett will be replaced by Chris Onslow, who joined PowerHouse as sales director last August.