Challenges: Dixons Carphone boss Alex Baldock
The recently installed chief executive of Dixons Carphone, Alex Baldock, must have had better days. When he took over ten weeks ago the main commercial concerns were doldrums in the smartphone market and the threat from online electronics and white goods sales from digital champions Amazon, AO and Argos.
As an import from digitally astute Shop Direct, among Baldock’s first actions was to start a review of all of Dixons’ IT systems and online services, including security levels.
It was as a result of this exercise that a hack of financial and personal data, involving an astonishing 5.9m customers globally, emerged.
Learning from past corporate IT failings, notably at TSB, Baldock is taking full responsibility for the mess by apologising profusely to customers.
Having discussed matters with payment processors, he believes that the 5.8m customers using chip-and-pin to pay for goods, whether in shops or online, should be largely protected because of the security built into the systems. Another 105,000 customers, perhaps Americans who were shopping with Dixons Carphone at airports, are more vulnerable.
The Dixons hack does not appear to have been the result of computer geeks playing silly games or seeking to extract a ransom. All the indications are that the motive is fraud, although thus far no cases have emerged.
The group is engaged in a massive communications exercise designed to reassure customers and alert them to possible swindles.
None of this is very helpful to Baldock, who was brought in to try to halt a share price slide of 35 per cent against a rising market in the past year.
But it underlines why retailers are potentially doomed if they don’t have the best-in-class online shopping experience and security. Having polished up in-store service and advice under the leadership of predecessor Seb James, no one now wants to see Dixons Carphone join Maplin, Comet, Zavvi et al on the scrapheap of history.
The WPP detox is just starting in the wake of the company’s AGM.
Chairman Roberto Quarta may have survived the effort to dislodge him over a lack of openness over l’affaire Sorrell, but soon after a new chief executive is inaugurated then shareholders will move on to demand Quarta’s scalp.
In the interim, pay chairman Sir John Hood (veteran of the Helge Lund pay scandal at BG) should be packing his bags after a whopping 30 per cent of investors failed to back the company’s remuneration report.
Hood seems to think running a pay panel is a licence to print money for directors.
As for Sorrell, he is ruined goods. A handful of shareholders felt that he has been harshly treated and would have liked to hear a glowing tribute.
But angry WPP board members are determined that he should not be allowed to rise Lazarus-like on the back of business connections nurtured at WPP.
BY the standards of Britain’s feeble audit regulator, the Financial Reporting Council, the fine of £10million imposed on PwC for signing off the accounts of BHS before it was sold to former bankrupt Dominic Chappell must be considered a triumph.
It was delivered within two years and is bigger than anything in the past. It is amazing the difference it makes if a regulator is being pushed hard by a Commons select committee and the subject of a review by former mandarin Sir John Kingman.
Given that PwC’s fee for the BHS audit was £355,000, it has been treated rather harshly.
The penalty was cut to £6.5million because of the co-operation of the firm with the inquiry. Similarly, the £500,000 fine, cut to £325,000, for audit partner Steve Denison together with a 15-year ban also looks harsh.
Up to a point, Lord Copper. The PwC audit of BHS was a fraction of the work which the auditor did for Philip Green’s empire.
As for Denison, no one could argue that a 15-year ban from his profession is a light escape. But the fine is equivalent to just half the average annual earnings of a PwC partner.
The real victim is the loss of trust in auditing. PwC may have escaped censure for its audit of Tesco but, like KPMG, its reputation is in tatters. The bell tolls for the oligopoly of the Big Four audit firms.