As Centro implodes, a point to keep in mind is the already remarked upon Coles Myer influence in the company. There are some interesting links around a former senior Coles Myer executive and the Centro CEO, Andrew Scott.

The key is board member, Peter Wilkinson. A former head of Myer and a senior executive of Coles for a number of years, he headed up David Jones where he recruited Stephen Goddard and Mark McInnes from Coles. In fact it was from Officeworks, where Goddard was the CEO and McInnes was the Merchandising General Manager. They would get different roles at DJs: McInnes is the CEO and Giddard is the Finance boss, and also the expert on logistics and IT.

They were recruited from inside Coles Myer to head the start up of Officeworks. A key executive who worked from corporate with them was Andrew Scott who headed the search for sites for the early batch of stores.

Overseeing the trio and other executives was Peter Wilkinson, who was named to the Centro board via Andrew Scott and Graham Goldie, another former Coles executive on the board.

Both Goddard and McInnes have a good understanding of Centro and Andrew Scott. They also know or know of the large number of other Coles Myer executives at the company.

Graham Terry, Centro’s chief operating officer is a former Coles Myer property executive. The just retired Chief Financial Officer, Romana Nenna is a former tax expert from Coles. His replacement, Ivan St Clair, is a former Ernst and Young and Coles Myer executive.

It is interesting to note how few David Jones stores are in Centro malls in Australia. There is one store in The Glen in Melbourne, Centro’s major centre. But DJs isn’t in the Galleria in Perth. Together the Glen and The Galleria are valued at $1.7 billion (around 4.5% of Centros’ Australian property assets) and are the company’s most valuable local properties.

DJs management knew that Centro’s malls were second rankers compared to those run by Westfield and GPT.

If you look at the list of Centro malls and centres around the country, you will see how very provincial they are, apart from the likes of The Glen in Melbourne, Bankstown Square and The Galleria in Perth. They are regional centres or lower tier suburban malls which are difficult to sell and often trade at lower values than their big city peers.

Another point is that there are quite a few Coles, Target and Kmart (and Myer) outlets in these centres, as well as Woolworths, which is said to be close to Centro.

Could Woolies be a white knight? There are suggestions Centro could be stripped back to a few major centres with everything else sold off, but that will be tough given the outlook for retailing in the US and the tough state of the money markets.

Coles is out of the equation as it is now inside Wesfarmers which has no interest at all in any dealings. In fact Wesfarmers is more interested in rolling over its $4 billion loan.

Could it be a forced seller of Officeworks or Kmart if that is unsuccessful?

Peter Fray

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