It had been coming (and critics would say he had it coming). The only surprise is that it did not happen sooner.
Ever since April 2018, when French rival Klépierre abandoned its £5bn bid for Hammerson, which then walked away from its own £3.4bn bid for intu, the writing has been on the wall for chief executive David Atkins. Yet while he was flung on to the ropes by what many at the time thought would be a killer blow, he staggered back to his feet as the retail maelstrom whirled around him and remained standing even when Covid-19 wreaked further havoc on the sector and the £400m sale of a retail park portfolio to Orion collapsed.
Only now, more than two years after that fateful failed intu deal and after more than 10 years at the helm, has he finally decided to throw in the towel, announcing that he feels “now is the right time to search for a new chief executive”.
Note the revealing choice of words. Atkins doesn’t say it is the right time for him to leave. He says it is the right time to find a successor, a tacit acknowledgement that the ‘Atkins plan’ has failed – and how it has failed.
Tellingly, Atkins announced his departure on the very day British Land paused its search for a new chief executive. Crucially, Chris Grigg has looked to reduce British Land’s exposure to retail, and while the FTSE 100 company reported that its pre-tax loss had widened to £1.1bn in the year to 31 March after a 26.1% slump in the value of its retail assets, the value of its offices increased 2.3%, which is not to be sniffed at right now.
Compare and contrast Grigg’s strategy with that of Atkins, who looked to double down on retail by trying to buy intu, when the sector was already in deep trouble, after selling most of its office portfolio to Brookfield for £518m in 2012.
Atkins is now paying the ultimate price for failing to read the market, as is Hammerson. As to who will take the poisoned chalice from him, Timon Drakesmith might have been a possible internal candidate had he not left in 2019, and the Hammerson insider we spoke to admits there is “no obvious successor”. Not that there is likely to be a long queue of candidates.
As one senior retail investment agent drily notes: “I don’t know who the bookies’ favourite is, but it will be a hell of a time for someone to move into a retail-only piece. Who would want to take it over? It was a plum job at one point, but not anymore – I suppose the pay will help with that.”
Aside from who next, the other big question is: what next? The consensus is that no assets are off the table when it comes to what Hammerson might look to offload to generate cash and that it should try to sell what is sellable, such as its premium outlet centres and joint-venture stakes. But given that we are on the cusp of what retail analyst Richard Hyman describes as “the most extraordinary revolution in the retail industry that we’ve ever seen”, it is surely time for a more dramatic rethink of the whole business.
Perhaps it could reposition itself as a UK pure play or take a leaf out of LondonMetric’s book and pivot from retail to logistics.
One thing is for sure: Hammerson needs to ditch the Atkins plan. Retail is a busted flush.