So, it’s back to the track for one of Leighton’s Lads. The surprise, given his identity, is that he has been rehabilitated so early.
Yes, step forward Andy Hornby, who is to be the next chief executive of Alliance Boots, after a gap of two years. Oxford-educated Hornby was one of Harvard Business School’s most brilliant alumni, passing out first in his year. His gilded career was capped – he and many others supposed – when, at 39, he was appointed the youngest-ever ceo of a major bank. The trouble being that bank was HBOS. It is now apparent that Hornby was in over his head. Excellent, as his track record would suggest, at the retail side of banking, he either failed to notice or simply didn’t care enough about the near-criminal risk-taking on the commercial-lending side that helped to bring the bank down. Maybe his predecessor, Sir James Crosby, was ultimately culpable, but it was on Hornby’s watch that it all went so dreadfully wrong.
So, why Alliance Boots? As I said, retail is really Hornby’s thing. He was in his element as a thrusting subaltern at Asda under the leadership of Allan Leighton during the nineties. Hornby proved a more-than-competent manager as head of retail and md of the fashion unit, George. Among his illustrious colleagues at the time were Justin King, now ceo of Sainsbury, and Richard Baker, later ceo of Boots (prior to its Alliance Unichem merger).
Ordinarily, Hornby would not even be considered for such a high profile position as the one at Boots, given the seismic fallout in the City created by his HBOS tenure. But Alliance Boots is not some run-of-the-mill FTSE 100 company; in fact it isn’t publicly quoted at all, being in the hands of a private equity consortium financed by KKR and run by maverick Italian entrepreneur Stefano Pessina. Pessina has obviously made a judgement that the need to recruit top retail-bred management skills far outweighs the risk of having to go to the City, cap in hand, for more funding. It’s a mature judgement at that: Hornby had already been considered for the job, ahead of Baker, when his star was in the ascendant as chief operating officer of HBOS in 2003.
Boots itself has held up reasonably well during the recession, thanks in part to a strong performance from its cosmetics portfolio. But it labours under a tower of debt – the present management team having pulled off the biggest leveraged buyout in Europe right at the top of the bull market.
Worse, Boots’ strategic path is unclear. It is gradually, but inexorably, losing ground to the supermarket majors as a retail brand. Successive management teams have failed to unlock a convincing new rationale. Personally, I’m glad Hornby has landed the job. He’s certainly got something to prove, and that can only be good for Boots.