‘Doing a Gerald Ratner’ now describes any business gaffe, such is his infamy. He talks exclusively to Growing Business about his views on the press, near-financial ruin and his comeback venture
It’s easy to forget Gerald Ratner was a good businessman. In fact, he was one of the country’s most successful, building Ratners Group into a jewellery business with sales of £1.2bn. If he’d chosen his words more carefully, the entrepreneurial community would probably bracket him with the likes of Philip Green, Dyson and Branson.
As it is, it doesn’t. After 12 years in the business wilderness he launched his long-anticipated comeback last November with his online jewellery operation Geraldonline.com.
You won’t be seeing his name in any rich lists for a while and his business has a way to go before it can be regarded an unconditional success. For now he’s busy trying to set the record straight on the version of events that led to his downfall, hoping that the drip drip effect of brand building and reputation re-building will soon reap dividends. And performance to date suggests this latest chapter will be a success.
Is he bitter though? “Yes. I’d spent my life turning a loss making company into the world’s largest jewellery business. To see it all blown away was the hardest thing.” He joined the family business in 1966 and was made chief executive in 1984.
In less than 10 years he transformed it from a business with 130 stores and sales of £13m to a public company with 2,500 stores, 25,000 employees, the brands H Samuel and Ernest Jones, and profits of £121m.
But describing a sherry decanter as ‘total crap’ in a 30 minute speech to 6,000 directors at the Royal Albert Hall cost him his personal fortune, his job, wiped an estimated £500m off the company’s value and turned the profits into a £122m loss. His family named business was also re-christened Signet. A lifetime’s work catastrophically ruined overnight.
Interestingly, he’d been making the same comments in his speeches, more or less, for five years. But in 1992 the Daily Mirror, pursuing an anti-Fat Cat agenda received an advance copy of his speech from the IOD and sensing a story had a reporter there to verify that Ratner uttered the immortal words. It chose his line as the cover splash the next day.
The Sun then matched its fiercest rival in later editions and a media circus ensued. “They didn’t let go, and never let go. I understand they’ve got to add a bit of spice. I just kick myself that I gave them the ammunition.”
The stuff of legend now, Ratner is still protesting about the injustice of it all, arguing it was a “jokey reference” embellished for the occasion and describing the outcome as “sheer bad luck”. “People said I said our jewellery was crap. I didn’t. It was a harmless thing and nobody there said anything at the time. I think I’m a victim.”
It’s hard to tell how much sympathy he’d get from the customers who felt personally affronted and cheapened by his comments. He did also tell the audience that his company’s earrings were “cheaper than a prawn sandwich from M&S”.
But you can’t help but feel it was a relatively minor slip and has been at-least equalled by other figures. “I’m the only one who’s had to pay the price. When I was three year’s old I fell over and cut my knee and said it’s not fair. My mother told me ‘life’s not fair’. That consoles me,” he says.
Isn’t it about time he stopped feeling sorry for himself though? “You talk to anyone who has a life-changing incident,” he responds. “If you’re truthful about it you’re never going to pretend everything’s fine. Ratners was like one of my children. I thought about it 24 hours a day, not like the chairman of Barclays who comes in for a while and then takes another job. It’s what I lived for.”
And you can see his point. As he says, he didn’t shoot anybody, didn’t steal and wasn’t greedy with his salary. As chairman, he was admittedly in the ‘Fat Cats’ league, earning an estimated £600,000 a year and enjoyed a luxurious lifestyle. Not criminal by any stretch.
He says today, he’s viewed almost as a road accident, a figure of curiosity. And his notoriety has opened doors for the new venture. The episode also gave him the time to cycle and listen to music. “My first marriage and family life might have been more successful if I’d led that lifestyle beforehand.”
So, how did it affect his family and finances at the time? Your family tend to get on with their own lives, he says, which seems hard to believe when your partner or father is being castigated by almost every national newspaper. Financially, he paid the price as well.
His shares fell so far they were almost worthless, he says. Somewhat surprisingly, he owned only 1% of the business and claims £6m was wiped out.
He had no salary, but did receive a year’s pay on his departure. That, though, he says, was not enough to support him. “I didn’t have any money really. You spend what you earn and I had some debts and was in the midst of buying a new house, so it happened at a rather unfortunate time. People normally leave businesses like mine with millions of pounds. But it wasn’t until I sold my gym in April 2001 that I was financially secure again.”