Life & Culture

The machers who built UK plc

For decades ‘Gussies’, Great Universal Stores shares, along with those of M&S, formed the core of private share portfolios.


For decades ‘Gussies’, Great Universal Stores shares, along with those of M&S, formed the core of private share portfolios. Those who hung onto their GUS shares are now the proud owners of three top FTSE companies: fashion group Burberry, the catalogue shopping and DIY concern Home Retail Group and credit checking giant Experian.

The late Sir Isaac Wolfson was the business genius who built GUS. He joined the group in 1932 as a merchandise controller and rose to chairman. He remained in the job until 1987, completing more than 80 acquisitions along the way and earning a reputation as one of the great post-Second World War entrepreneurs.

Control of the firm was exercised through two classes of shares, an arrangement generally frowned upon by big battalion investors. But it did not matter, as long as the group produced ever rising dividends whatever the economic circumstances.

In 1996 Lord (David) Wolfson succeeded his cousin Lord (Leonard) Wolfson as chairman and ushered in a period of rapid change which saw the old GUS dismantled and remade. The two-tier share structure, which guaranteed Wolfson family domination, was removed.

The group moved from traditional mail order into store-based catalogue shopping with the purchase of Argos. It built on its experience in managing credit with the purchase of financial information group Experian. With the departure of David Wolfson, a new non-family and more financially driven management took over. Former Charterhouse investment banker Sir Victor Blank moved in as chairman; the Experian boss John Peace as chief executive and David Tyler, formerly of Christie’s, as finance director. They concluded that the era of the conglomerate was over and what investors wanted was focus. In two hectic years, the face of GUS was transformed forever.

The traditional home shopping business, the core of what Isaac Wolfson had created, was sold off to rival Littlewoods. Burberry, which for years had been regarded as a dowdy raincoat manufacturer and retailer, was converted into a global, fast growing brand. Burberry was demerged to existing shareholders in 2005.

In 2006 Blank and company began the final demolition by splitting GUS into two — Argos and Experian — and distributing the shares to existing holders. Along the way, Argos, now Home Retail Group, was enlarged with the purchase of Homebase.

The three veterans of the GUS break-up, who produced real value for investors, became heroes in the Square Mile for their intelligence in doing the splits and creating shareholder value.

In the process they had dismantled their executive posts and were now a GUS diaspora looking for new ventures. Blank landed one of the most prestigious jobs in the Square Mile as chairman of the Lloyds TSB, becoming the first Jew in modern times to head a clearing bank. It proved to be no sinecure. He had barely settled in when the credit crunch hit and the disastrous deal with Halifax Bank of Scotland (HBOS) was done. As a result, Blank’s stay at Lloyds proved to be brief, with shareholders, led by the government, making him the scapegoat for Lloyds’ failings. The other GUS veterans have fared much better. Former chief executive John Peace became a beneficiary of the crisis. As Gordon Brown sought to strengthen his government in the wake of the 2007 credit crunch, Lord Mervyn Davies, chairman of London-based emerging market bank Standard Chartered, was whipped off to government. Peace, as deputy chairman, moved seamlessly into the top job.

The third member of the GUS trio, finance director David Tyler, also has landed on his feet with a FTSE100 chairmanship at J Sainsbury. He takes over from Sir Philip Hampton, who has moved on to the challenge of chairing the badly holed Royal Bank of Scotland.

Tyler has not moved into a show job. Under the leadership of Justin King, the grocery group has recovered by grabbing back growth from market leader Tesco. But it has inherited an unusual share register, with the Sainsbury family still speaking for up to 16 per cent of the stock and Qatar’s investment agency holding 26 per cent of the shares. So the grocer will continue to be a takeover target, keeping its new chairman, a tireless worker for the Jewish care home Nightingale House in south London, more than engaged. But the GUS experience should hold him in good stead.

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