Profile: Phil Dutton, FD of Matalan

Phil Dutton is proud of the suit he’s wearing, so proud in fact, that as he poses for photographs, he carefully undoes a button on his blazer and opens it up to show me the label – it’s Matalan, of course.

Retailing at a very affordable £65, he tells me the suit is made from fine Italian cloth and manufactured in ‘almost the same factory’ as that of a more traditional high street-based UK retailer – one that perhaps isn’t doing as well as it’s more out of town, billion-pound market cap counterpart. I’m left to guess the answer, but as the suit I’m wearing is made by Marks & Spencer and was almost double the price, I choose to keep quiet.

The quality and affordability of his two-piece is symbolic of Matalan’s success in the ‘high value, high volume’ retail arena, as Dutton so often repeats. Ever since its first store opened in 1985 in the unfashionable location of Preston, the business has grown exponentially, today boasting almost 200 stores and over five and a half million square feet of selling space nationwide.

Despite announcing that its profits would barely rise this year after suffering a significant dip in sales in March and April 2005, due to difficult economic trading conditions, it has no plans to stop there.

While retail icons such as M&S have seen a long-term slowdown in sales, and recent retail casualties fall by the wayside, Matalan is keen to capitalise on its stranglehold on the ‘high street quality at half the price’ market. Dutton believes he has joined with the right experience at the right time.

After eight years in practice with PKF and PricewaterhouseCoopers, 12 years at the financial helm of Asda, including three years on the supermarket’s successful clothing line George, Dutton joined Matalan in September 2002 and brought his entire skillset to the discount volume retailer.

But Dutton is no ordinary finance director. Along the way, he has also been a IT expert, an authority on change management and is currently two years into leading a multimillion-pound, Capgemini-driven IT systems change programme. As he readily admits, the more his career has progressed, the less it has been focused on a purely financial role.

‘It was encouraged during my time at Asda that finance managers moved to run other areas of the business. This was very much an Asda-type dynamic. It gave me the opportunity to run the Asda Wal-Mart integration team, which was a terrific three years. I was looking at systems programmes and I wasn’t part of the finance function in that time.

‘In a sense this liberated me and took me out of my comfort zone and was all part of the broadening process. I was sat debating issues with people that knew a lot more about their specialist areas than I did it. It was humbling – but it gave me so much more scope to broaden my skillset.’

Dutton admits that he began his career believing all that mattered in business was finance, but his time at the ‘mum-targeted’ supermarket taught him the valuable lesson that a wider set of skills, including experience and knowledge, are what it takes to become a successful finance director.

‘I like to think of myself as a better FD for having been in charge of integration, IT and change. The way you tackle problems should not focus purely on financial analysis. You should look behind the scenes for the route cause of issues and opportunities, as opposed to purely focusing on the outcome.’

As FD of Matalan, Dutton says he uses his skills wisely so that his team benefits from his management experience.

‘Being an FD is more than just analysing figures, it’s about testing your management skills away from just finance. It’s about managing people, managing processes and supporting the business away from just technical skills. It’s a very powerful thing to have at your disposal.’

Dutton believes more FDs should look at expanding their roles. Instead of merely relying on technical knowledge and expertise, they should aim to understand their business so they can make a contribution outside the remit of financial controls.

‘Finance and accounting is the backbone of everything I do, but you need to use this skill to have an impact on a business. You need to understand how a business operates and use your accounting knowledge to have a commercial dialogue with a fellow director whether it’s about systems, logistics or buying.

‘I don’t think FDs do this enough. Within the profession, when you’re auditing a company, you always like to think that you understand that particular business. But unless you’ve actually been on the other side of the fence and run a company you can’t.

‘The one thing that dawned on me was that I really wasn’t as commercial as I thought I was when I was auditing a company. It’s a real task for any audit team to get that level of understanding where they turn up for a few weeks to issue an opinion on a set of accounts.

‘I’m more interested in the management information than I am about a set of financial statements. I’m looking at sales, margins and cashflow generation, I’m not looking at an international financial reporting standards compliant balance sheet.’

It’s not just Dutton’s impressive portfolio of skills that make him a successful part of the Matalan board, it is also his passion for retail – a market he knew he was destined to work in.

‘When I was in practice, I found that I enjoyed working on the bigger clients and bigger audits. Quite a few of the audit clients were retailers, and that’s where I found out that I just absolutely loved retail. There were some private company retailers but the big retail client that was serviced out of the Leeds office was Kingfisher, which included Charlie Browns, Superdrug, B&Q and Comet’

Dutton says that, ever since he found his niche in retailing, his accounting skills have transferred easily to the fast-paced world of discount fashion.

‘The real fun, excitement and satisfaction about the job is not just about being an FD, it’s about running a business and being part of the direction it’s taking and the decisions it’s making. The big difference for me is that, from an audit perspective, you’re looking at a set of outputs – this is the performance of the company for the year – the real interest is in managing the inputs that produce those outputs.

‘How good is your product availability for customers, how good is your price position, how good are your ranges and how relevant are they? If you get that right, the number in the bottom right-hand corner will look after itself.’

Even though Dutton is well established within the business – and despite his exhausting 13-hour days – he still gets excited about his job. This is especially the case when it comes to the weekly ‘best and worst fashion meetings’ with the buyers – even though he freely admits he ‘might’ be a bit old for some of the clothing lines.

‘You systematically work through a problem in a best and worst meeting – you’re looking at high fashion stuff, which is usually beyond me and aimed at a much younger market. But at least you can see what is and isn’t selling, how big the buy is on that product and what sort of margin exists.’

Even though he admits he’s no fashionista, his saving grace is that clothing trends are largely based on attitudes.

‘These days you can’t stratify products through an age profile. Attitude is very important, so what a 40-year-old bloke wears this year is not what a 40-year-old bloke would have worn 10 or 20 years ago. I know for a fact I don’t dress like my dad did in his early forties. From a product perspective the ranges that might be high fashion one year, like cargo pants a few years ago, become just a core product. Fifty-year-olds wear cargo pants now.’

Perhaps the next time I meet with Dutton, it should be in a less formal environment in a pair of combat trousers and a t-shirt with the latest trendy logo emblazoned on it – and this time I know where to get them from for half the price. If only all FDs dressed as well.

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