Rarely nowadays do you find a finance director in charge of a business that straddles such diverse industries as high and lowbrow retail together with credit checking. And naturally, or so he says, his shopping tastes do, too.
But, David Tyler, group FD of GUS, the now rather anachronistic conglomerate that oversees Experian, a credit checking and marketing business, Burberry, the luxury goods chain, and Argos, the high street retailer, is responsible for the financial strategy of these three businesses.
However, since beginning at GUS, Tyler and his colleagues have been working to steer the company away from its classic structure built up in the 1940s and 50s by industrialist Isaac Wilson at a time when it was entirely appropriate to have such a mish-mash of businesses under one roof.
But industry has evolved.
‘We as a management team over the past two or three years have taken a different view; that it is important to focus our activities onto fewer number of our activities. We’ve taken the view that we can’t pretend to be operations,’ explains Tyler. ‘We’ve been going through a process of divesting a world leaders or first-rate industrial experts in more than two or three categories.’
Indeed with the flotation of Burberry in July it means GUS’s management team will only need to focus on two of its three major activities: Argos and Experian.
Rosy predictions
Predictions are rosy for Burberry, despite its share price having dipped a little since its initial public offering. With the effervescent American Rose Marie Bravo leading the management team and three branches opening this year in California, Knightsbridge and Barcelona, Burberry’s shares are expected to put up a resilient performance.
It’s good news for Tyler given that in the US, Experian has been experiencing stormy waters in recent months. In dollar terms, like-for-like sales were down 4% across Experian North America, according to GUS’ trading update in July.
And although Argos is growing faster than retail spending, the trading update revealed like-for-like sales were 5% in the three months to 30 June, compared to 12% for the same period last year.
Nevertheless, Tyler’s traditional path into financial management is undoubtedly the best GUS can ask for in what could turn out to be a very difficult period ahead. Current trends suggest we as consumers are set to have a crisis of confidence and cut back on spending.
Choosing Unilever
After obtaining an economics degree at Cambridge as a’raw 21 year-old’ Tyler joined the financial management-training programme at food-to-home products giant Unilever in 1974.
He chose Unilever over other multinationals in need of a blossoming finance professional because, by the mid-1970s, the finance function there ‘was already seen as a much more commercially oriented team’, rather than the typical perception of beancounters.
‘It was always part of my mindset throughout my career that I’d rather help manage the company using financial skills to do so, rather than simply being there to look at the numbers,’ Tyler explains.
Tyler opted for management accountancy over chartered accountancy neatly sidestepping the embattled profession of auditing.v ‘I’ve always wanted to be a manager within a business and help to direct strategy. I’ve never been someone who has particularly been interested in auditing the historical records of a company,’ he confirms.
Clearly a wise move in hindsight.
Auditing
Of the current debate on auditing, Tyler is nailing his colours firmly to the fence.
Although he acknowledges the government’s need to look at the processes of auditing, ‘because it is possible in some companies that the auditors do get too cosy’. He also states that external auditors who are new to the job ‘are not as effective as when they understand your business’ – an argument used vociferously in recent months by the accountancy industry against moves to bring in mandatory auditor rotation.
But he said GUS will work with ‘whatever final system is set out by the authorities’.
On how to apply financial skills to a managerial post, Tyler is unequivocal, particularly in promoting his qualification over that of a chartered accountancy one.
‘The management accountancy qualification is much more commercially orientated towards running a business rather than putting together a set of accounts and that’s valued more highly by the people making decisions within the business.
‘What management is really looking for is someone who will help them look forward and make good judgements about the production of their business.
And that’s something that is probably better learnt in the commercial training within a company than necessarily within a firm of chartered accountants,’ says the CIMA-trained accountant.
His key words of wisdom for budding finance professionals looking for a more strategic role are: ‘The most skilled manager is the one who knows how to use his ears really effectively and his nose, not necessarily his mouth.’
Despite his reticence on issues of auditing, Tyler is not shy in coming forward with his views on proposals to bring in quarterly reporting for UK plcs.
‘Personally I don’t support quarterly reporting. I think it encourages too much short-termism which you see in the United States in particular; and far too little emphasis on building shareholder value in the medium- and long-term,’ he states. ‘It means that investors and management become far too short-term focused – that’s the danger.’
He is so confident of his stance that he adds: ‘Most of the FDs that I talk to would take a similar view.’
The decision however could be out of the hands of UK regulators. The Financial Services Authority is conducting a wholesale review of its listing rules due to be completed before next summer. The review will canvass the views of listed companies’ directors on quarterly reporting. But, the European Union may also issue a directive well before then requiring listed companies in Europe to report on a quarterly basis.
Developments in financial reporting and corporate governance due to several high profile US shocks in the marketplace, means multinationals the world over are facing an important era.
Investors, although slowly regaining some faith in capital markets, remain wary. But with a finance director who holds traditional skills as key and a progressive view to change, GUS appears ready to weather an economic storm.