The man behind the counter

THE FRIDAY INTERVIEW:  PAUL KELLYManaging director, Selfridges Group Ltd

IT’S A rare enough event for a financial journalist but sometimes a chief executive will offer you just a little too much information.

Sitting in the board room at Brown Thomas’s flagship store on Grafton Street, self-confessed “shopkeeper” Paul Kelly responds to a question about where he buys his well-cut clothes.

“The shirt is Brown Thomas, the tie is Brown Thomas, the suit is Brown Thomas, the shoes are Brown Thomas, the socks are Selfridges and my underwear is Selfridges,” he says with a smile.

I can’t speak for the underwear but the rest of Kelly’s outfit – navy suit, starched white shirt and silk tie – looked immaculate.

“I don’t shop anywhere else,” says Kelly, who was recently appointed by wealthy Canadian businessman Galen Weston as managing director of Selfridges Group Ltd, Brown Thomas’s parent.

Does his partner Shelley, fashion director at Brown Thomas, also shop “only” with the chain? “You’d better ask her,” he says with a smile. “Yeah, yeah, she does.”

Kelly is in chipper form, in spite of the gloom here about the International Monetary Fund bailout and hairshirt budgets.

It’s a Friday afternoon and Brown Thomas is buzzing. There’s no evidence of a recession in this posh department store, where you can purchase goods from €4 right up to €20,000, according to Kelly.

On a walkabout after the interview Kelly confidently boasts that its Christmas decorations are flying out the door. And Santa is doing a brisk trade.

“In 10 days’ time, there will be no Christmas decorations,” he states.

“There isn’t another place in this country that has the vibration and electricity about Christmas as this store.

“People are buying things. They havent stopped. People are alive and they are out enjoying themselves.”

Like all retailers, Brown Thomas is hoping for a busy Christmas. The eight weeks from the start of December to the end of January [when its financial period closes] will make or break its year.

“This is a very important time for us for two reasons. One is that pre-Christmas, you need to sell an awful lot of product at full price.

“After Christmas, you want to have the least amount of stock that you mark down. If you can pull that off then you’ve had a good year.”

Kelly is confident that “sales will be up” this year on 2009 but won’t go beyond that prediction.

In the 12 months to the end of January 2010, Brown Thomas reported an operating profit of €2.7 million, 81 per cent below the €14.7 million recorded a year earlier.

Kelly describes last year as “the darkest days of retailing and the darkest days for this country”.

“Every second week there was a price promotion, there was an ad there was a discount off dah dah, dah dah, dah dah.

“The whole country was on permanent sale,” he says.

Not anymore. “So we said for 2010, I’m not doing any price promotions,” Kelly explains. “We’ve done none. With the exception of a sale in June, which we always have and is an end-of-season sale. And we’ll have a sale after Christmas.

“There were 165 days of the year where we were on price deals, promotions or whatever. This year we’ll finish up with a total of 35.”

“A business like BT is at the premium/luxury end of the market and you do not, you know, discount premium goods, you just don’t do it.”

Strange then, that last Saturday, Brown Thomas was offering 20 per cent off for those with store loyalty cards.

Sales staff were happy to help you fill out the form at the tills. And there were sale stickers on a range of kitchen accessories.

According to Kelly, Brown Thomas has bought an appropriate level of stock that it thinks it can shift so that it doesn’t have to “price promote, price promote”.

He won’t be left with an excess of Louis Vuitton handbags or Gucci shoes.

There’s a six-month waiting list for a Kelly bag from Hermès that comes with a chunky four-figure price-tag.

“So what you will see if we’re sitting here next year, please God – and a lot depends on what happens in the next six to eight weeks – is that we will show growth in our business.”

What about the impact of the Government’s four-year plan?

“There’s nothing I can do about that . . . but at least there is a plan.”

He is confident people will continue to buy goods that are “well-made, have longevity and history, and a connection to them”.

Brown Thomas is about more than the Grafton Street store. It has branches in Cork, Galway and Limerick and three BT2 outlets in Dublin for a younger set. How did the regional stores perform last year?

“Well everything went pssst at the same level,” he says. “But the recovery in Dublin is a lot stronger.”

The retailer has introduced redundancies and frozen pay but Kelly says it is in better shape than most of its rivals.

“ the four department stores we own the freehold, they are our properties.

“We have no bank borrowings, we have no bank debt and any money that we have spent in the past couple of years in terms of capital is all generated out of cash flow in the business.”

KELLY, A DUBLINER, left Brown Thomas in 2003 after being promoted by long-time mentor and store owner Galen Weston to the top job at sister chain Selfridges in Britain.

What did he make of the Celtic Tiger from afar? “It was fairly scary. We thought we could conquer the world, that we could buy everything we saw. And we overdosed completely.”

To some, this might sound a bit rich. After all, Brown Thomas was a flag carrier for the Celtic Tiger, flogging expensive designer gear to the Johnny-come-lately brigade.

“You’re a business and you’re going to sell things. But we did not take on more debt, we paid everything off and we now have no bank borrowings. That’s the difference.

“Our business is a conservative, well-run business. I’m not saying we’re a bunch of geniuses here.

“The wave hit everybody and everybody went under water. We’ve sorted ourselves out. We’ve made lots of changes and the business is in good shape.”

Kelly concedes service levels dropped at Brown Thomas in recent years, but insists it is “better today”, adding that the “art of dialogue” has returned to Irish retailing.

He wants customers to have “fun” when they go to Brown Thomas, regardless of the economic backdrop.

“You come off Grafton Street into my store, you may be pissed off, you may be doom and gloom but . . . this is a stage, this is a platform, this is a show and there’s nothing false. It’s all genuine.

“I need you to go out of my store and feel good. I’d feel even better if you’ve left your money behind. That’s what it’s about.”

Retail is in Kelly’s blood, although his parents wanted him to pursue accountancy.

He spent time at the College of Commerce in Rathmines but “didn’t want to become” a bean counter.

“So I had a bit of a problem,” he chuckles.

Kelly had worked summers for a small department store group called Bolgers. He went to John Bolger, the owner, and twisted his arm to give him a full-time job as a trainee manager.

Bolgers was later taken over by Dunnes Stores, where Kelly spent a dozen years working his way up the management ladder.

“I got on with all of them ,” he says. “It’s a great business.”

In 1984, he went to work for Weston at Brown Thomas. “I left one family for another.”

Twenty-six years on and Weston has entrusted him with responsibility for Selfridges, Brown Thomas and Holt Renfrew in Canada.

He is currently negotiating the purchase of the luxury Dutch department store group, de Bijenkorf.

“The Canadian business is doing well. The UK business is doing well and I can’t talk about the business in Holland because we don’t own it yet.”

With Brown Thomas flagging in the recession last year, Weston asked his trustry lieutenant to once again take a more hands-on role with the Irish business to help it turn the corner.

At 58, Kelly is relishing the challenge.

He spends most of his week with Selfridges in Britain, returning on Fridays to Dublin and his family home in Foxrock.

In his spare time, Kelly loves to potter around his garden.

“I’ve put a lot of money into my garden. Personally, I’m not there all day long doing it myself but I believe in the environment and the green, and the butterflies and the squirrels, and all the stuff that goes on in the garden.”

Do you have squirrels?

“Yeah, unfortunately not the red ones but I’ve lots of the grey guys, little foxes and all sorts of things.”

And he’s into bees. “I’ve beehives, yeah. I find the peace and tranquillity of that is the complete opposite of work.”

His favourite plant is the cameillias. “It has a lovely flower at different times of the year.”

Who knew he had such a sensitive side?

With a new overarching group role, Kelly has no thoughts of retirement. “The only way that I’ll be going out of here is in a pine box,” he says cheerily. “I have fun everyday.”

But wouldn’t he eventually like to kick back, tending to his garden? “You can do that at the weekend. I’m not a sitting-around person.”

For now, he remains optimistic about Ireland’s future. “We’re not broke,” he says. “There’s hundreds of thousands of people who are working. In recessions and depressions, millionaires are formed. New businesses are formed. We just have to find a new way of doing things.”

“I think this building today is very much like an oasis in a desert. People want to come to places that are clean, places that are safe and a place that is fun and entertaining. The city needs to do that in a bigger and better way . . . We do what we can within our four walls. But there’s a lot of dirt and filth, badly maintained streets, badly maintained pavements, badly maintained street furniture.

PAUL KELLY:  GETTING THE MEASURE OF. . .

Competitors he admires

“Lane Crawford in the Far East. Bloomingdales in the States. These are a world class stores. Harrods is a great business. It’s an institution in the UK. It’s a great store. We [Selfridges] don’t see them as a competitor as such.

The €55 potato masher featured in Price Watch, November 8th: is it good value? (Conor Pope’s verdict: A ridiculous price)

That depends on what potatoes you’re mashing, doesn’t it? Everything is relative but in fairness it’s not the only potato masher downstairs.

Galen Weston

I wouldn’t be working for someone I didn’t admire, love and get inspired by. He does all of those things for me.

Last year’s Farmleigh gathering of Irish business diaspora (he declined an invite)

What’s it done since? It’s a talking shop really. I’m interested in active stuff. I’m not in a debating society.

Dublin as a visitor destination

I think this building today is very much like an oasis in a desert. People want to come to places that are clean, places that are safe and a place that is fun and entertaining. The city needs to do that in a bigger and better way. . .We do whatwecan within our four walls. But there’s a lot of dirt and filth, badly maintained streets, badly maintained pavements, badly maintained street furniture.

On the Record

Age: 58

Family: Partner Shelly Corkery. He has three sons and three daughters.

Why is he in the news?Recently appointed to new group role, Kelly is leading Selfridges proposed acquisition of Dutch department store group De Bijenkorf.

Hobbies: Gardening, walking and international travel.

Something that might surprise:"My favourite television channel is Discovery."

Something we might expect:"I was the first to champion Tom Ford menswear."