Nompumelelo Magwaza
The resignation of Grattan Kirk as the chief executive of listed furniture retailer JD Group surprised the market yesterday as his replacement, David Sussman, who is currently the chairman, is close to retirement age.
Equally surprising was the ballooning unsecured loan book, which the company said had grown to R2.2 billion from R1bn in the six months to last December. Overall the loan book rose 30 percent to R9.5bn.
Daniel Isaacs, an analyst at 36One Asset Management, said the 120 percent increase in the unsecured loan book in just six months was a “massive jump”.
However, the group said: “We have maintained our cautious approach to personal credit extension by limiting unsecured loans to a maximum term of 24 months and to a maximum loan value of R25 000.”
The company added that revenue increased 6.7 percent to R16.4bn, with the retail gross margin growing to 30.8 percent from 29.9 percent.
Commenting on the management changes retail analysts said Sussman, who has about 30 years experience in the furniture retail business, might soon be replaced as he was approaching retirement. Although analysts did not want to speculate on the reasons for Kirk’s resignation, some said it was a loss to the company.
JD Group said Kirk, who resigned from the various subsidiary companies with effect from February 20, had served the group with distinction since his appointment as a financial director of Connection Group Holdings in 1997.
Sussman said: “Grattan served the JD Group with honour and has played a pivotal role in the transformation of the group. On behalf of the board and all his colleagues I wish to thank Grattan for his contribution to the group.”
Kirk will continue advising the retail division until he leaves the company in June. Vusi Khanyile, the lead independent non-executive director, has been elected chairman.
Absa Investments analyst Chris Gilmour said Sussman must be approaching retirement and that it was likely that he would be replaced. “The resignation was very strange,” Gilmour said.
Asked if there were any tensions between Kirk and Sussman, Gilmour said “as far as I know JD Group was a very happy place”.
He said Sussman was instrumental in getting Kirk appointed as chief executive.
Isaacs said Sussman would be chief executive for a short time and added that it would be a loss to the firm because Kirk was a good businessman.
Kirk said: “Having achieved the significant goals that I set at the start of my term as chief executive in June 2008, this is an important time for me to move. I want enough time to still pursue at least one further major career challenge.”
Bennie Van Rooi, the newly appointed chief executive for customer financial services at JD Group, said that there was nothing untoward about Kirk’s resignation. “He felt he needs to move on and that he was looking for a further challenge in his career. He has had a very long and distinguished career in the group,” he said.
He said Sussman had been involved since day one of the JD Group and had been chairman after the listing of the group. “He’s always had executive oversight and executive involvement.”
The shares declined 1.34 percent to R41.11 yesterday.