Behind the Levene saga

By Karyn Scherer

At 70, David Levene is too old for regrets. He does not believe in them anyway.

But he does concede that he sometimes wonders whether a single decision made nearly 20 years ago might have changed the course of New Zealand business history.

It was the day he invited a young George Courts' employee, Stephen Tindall, to Levene's head office to offer him a senior management job.

Mr Tindall, then in his early 30s, was enthusiastic about the opportunity and keen to take on the job, which involved establishing a proper importing regime.

But it was not to be. After reviewing his answers to a battery of management tests, carried out by consultants, the company decided against hiring him.

In a foreword to an upcoming book about his then-prospective boss, David Levene: A Man and His Business, the founder of The Warehouse Group reveals the rejection was a turning point in his life.

"I cried when I got off the phone that day," Mr Tindall writes. "I was absolutely shattered. It was probably the worst feeling I have experienced in my adult life. In the end I picked myself up and thought, 'blow them, I'll go and start my own business'."

A few months later he opened the first Warehouse store, on Auckland's North Shore. The rest is history.

Ironically, when the Levene chain hit the financial skids three years ago following its sale to the Skellerup group, Mr Tindall was approached about stepping in to help.

The rescue plan was the brainchild of a former Warehouse director, Gerard Peterson, and would have involved bringing Taupo brothers David and Paul Trewavas - owners of several independent Levene stores that are still thriving - into the business.

"I think at that stage it was too late," Mr Tindall says on reflection. "We did have a little bit of a closer look - to be honest - at Palmer's because we felt that could integrate with the Warehouse. But [The Warehouse Group] didn't really know the paint and decorating business."

In his modest office on Auckland's North Shore, where he still helps run a busy property company, Mr Levene is reluctant to shed much more light on their talks.

"Stephen phoned me and asked me about it. Numerous people contacted me and wanted me to become involved. But it was just too late. Too many good people had already gone," he sighs.

It has taken until now for him to talk publicly about the sale of his beloved family company to Skellerup and its subsequent demise. While it has been cathartic to tell his story to Massey University lecturer Ian Hunter, he admits to being worried sick about how it will be received.

"My immediate reaction was I didn't want to go public. Then on reflection, I decided I wanted to acknowledge the people I worked with over the years, and especially at the end. I felt maybe the story should be told.

"There were things I couldn't say because I didn't want to hurt people's feelings. I hope I didn't put the knife in too much. I don't see the point in being nasty."

There are few startling revelations. He admits to taking part in a price-fixing ring in the 50s, which ensured there was no competition between paint, wallpaper and glass merchants. But he also notes that he later developed a reputation as a "dirty discounter," when he decided he no longer wanted to play the game.

He also outlines the careful lengths to which he initially went to hide his investment in wallpaper and paint factories from his competitors. But as he acknowledges himself, it is really the Skellerup years in which most people are likely to be interested.

As it happens, only a small portion of the book is devoted to the saga, given that the sale also marked the end of his career. He names several people, including marketing manager Martin Weekes, Skellerup retail manager Stuart Campbell, and his former right-hand man, Bob Redmond, as key figures who contributed to the chain's plunge into the red.

He makes it clear he did not agree with the move away from the core business of paint and wallpaper, and despaired at the decision to dump long-time advertising agency Park Avenue.
The decision to sell the paint factory to ICI was a crucial blow, as was the decision to merge Vision Wallcoverings with Ashley.

Skellerup, Mr Levene muses, "thought it had bought a glamour retail business. What they had really bought was a vertically integrated manufacturing and retail business."

He also despairs at how quickly the cosy company culture he so carefully developed turned frosty once he was gone. Long-serving staff were fired and others left in despair.

The book reveals that several potential buyers carried out due diligence on the chain once it went into receivership. But none were willing to take it on. As a last shot, the receivers turned to Mr Levene. But he decided it simply was not possible. Too many good staff had gone.

Mr Weekes, who will shortly finish as marketing manager for Eden Park, says friends have already warned him about the book.

He is a strong supporter of Mr Redmond, whom he credits with building up the Levene brand.

He believes Mr Levene has painted too rosy a picture of his own era and exaggerated its financial performance.

"What he had was quite an intricate equation of David the landlord, David the factory owner and David the retailer. When times were bad, he would generate revenue from selling from the factory into his own store and he would always generate money as his own landlord.

"When you took the property side out of it, you took away a very significant element of the business. Without it, the equations didn't stack up."

Mr Weekes says the reason the empire crumbled was quite simple: "Too much was paid for the business and really the business made money via the properties and the factories."

Not surprisingly, Mr Levene does not agree.

"Even if they bought us for half the price, the result would have been exactly the same. It wouldn't have made any difference."

As for the brand, it was Reston Griffiths of Park Avenue who he believes deserves the credit.

He also notes that it was only a few years before the business was sold that the properties were separated. Skellerup offered to buy the properties but in the end, he decided to keep them.

"It was the retail, paint and wallpaper businesses that Skellerup bought. They had already been paying rent for several years and Skellerup were obviously satisfied with their financial performance."

He now wonders whether keeping the properties was such an astute move. When Skellerup, then known as Maine Investments, came to him after the sale and wanted to be let out of the wallpaper factory lease, he agreed, even though it had several years to run.

"As it has worked out, keeping the properties cost me a lot of money. Buildings like Newmarket were empty for a year, and the distribution warehouse. It's cost me millions."

What he does admit is that profits were never a priority at Levene under his stewardship.

"That was because people came first, before profits," he agrees. "As long as we made enough to expand the business and keep everybody comfortable, I was never one to drive the profits. What I drove was security for my family and my people."

* David Levene: A Man and His Business will be available in bookstores from November 22.