Case 4.1 Ratners: A case of corporate reputation
This case was written by Neil Botton, a Principal Lecturer in Strategic Management,
University of Westminster, and Dr Chris Carr, a Senior Lecturer in Strategic
Management at the Manchester Business School, University of Manchester.
Introduction
On 11 January 1992 it was announced that James McAdam would take over
from Gerald Ratner as Chairman of the troubled Ratners Group and that
Gerald would concentrate on the day-to-day running of the business. Mr
McAdam had apparently been hired because he was well known in the
banking community and the City. Gerald Ratner had grown the company
from relatively small beginnings after a boardroom coup when he took
over from his father, Leslie, in 1984. At its peak, under Gerald’s leadership,
as both Chairman and Chief Executive, the company had well over 1000
stores worldwide and a ten-fold increase in share price to 383p. The
company had been grown by a combination of aggressive acquisition on
both sides of the Atlantic, the introduction of a formula of volume-oriented
retailing and aggressive management of the supply chain. Gerald Ratner
was forced to resign from the company on 25 November 1992 because of
the ‘continued negative press’ that had been associated with his speech at
the Institute of Directors in April 1991.
The early years
Leslie Ratner, Gerald’s father, founded the company in 1949 on his son’s
birthday, and ran it as a traditional company in a conservative, seemingly
highly constrained industry. By 1984, when Gerald ousted him, he had
built up 130 branches but, with losses of £350 000, the company showed
signs of struggling.
At the start of the 1980s most jewellers traditionally made the majority
of their sales in December, converted their cash receipts to gold stocks in
the New Year and waited out the coming year until the following
December to repeat the cycle. Without a good Christmas they had a very
thin time. The value of stock constrained any modern trend to self-service
and promotional display designs, despite opportunities afforded by newly
introduced ‘deep tunnel’ store entrances.
There was a distinction between real jewellery and costume jewellery.
Real jewellery was, at that time, made from solid, but not plated, gold,
silver or platinum. There might be precious or semi-precious stones set in
the pieces. Real hollow-gold jewellery was to appear later, introduced by
The referral and influence market domains 253