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A changing of the guard will inject some much-needed fizz into Reckitt

Reckitt Benckiser

The departures of Paul Polman from Unilever and Rakesh Kapoor at Reckitt Benckiser in quick succession brings the curtain down on a remarkable era for two of Britain’s biggest consumer goods companies.

Both men transformed their respective employers into first rate, fast moving, global brand champions by conquering some of the world’s biggest emerging markets. And broadly speaking both companies proved to be a great ride for investors, their share prices outperforming the FTSE 100 during a decade of stewardship.

Their successors – Alan Jope, a Unilever lifer who replaced Polman at the start of the year, and Laxman Narasimhan, a Pepsi executive who will take the reins at Reckitt in September – must now usher in a new era of good governance and fresh growth. Polman’s legacy was soured by a shareholder rebellion that forced Unilever to shelve an attempt to shift its headquarters to the Netherlands. The row also raised questions over how the company was run. Incentives for senior executives frequently failed the taste test, and the board went missing when Polman tried to railroad the attempt to go Dutch past shareholders.

Similarly, governance at Reckitt was repeatedly found wanting. Chairman Adrian Bellamy was forced out after hanging around for 14 years and rewards for top executives were lavish – Kapoor will depart having earned around £150m over 10 years. Meanwhile, the company’s remarkable share price rise has stalled in the last two years, weighed down by costly mishaps in Australia and South Korea, questions over the £13bn takeover of baby formula maker Mead Johnson, and tepid growth.

A changing of the guard provides the perfect opportunity to demonstrate that investor concerns are being taken seriously.

Jope exudes a much calmer air, in contrast to the messianic Polman. He also seems alive to the sudden shift in consumer tastes, promising to step up investment in brands with an environmental and social purpose, which are driving much of its growth.

Reckitt, who in Narasimhan, a senior executive at Pepsi, has opted for an outsider unknown to most in the UK. Growth has been sluggish and looks set to disappoint again this year, and Reckitt’s share price is down a fifth from its 2017 high.

Meanwhile, consumers are shunning big brands for more sustainable alternatives, a serious issue for a company that has pinned its future on a collection of super-brands such as Nurofen, Cillit Bang and Dettol.

Laxman Narasimhan is Pepsico’s chief commercial officer

His biggest decision will be whether to press ahead with a clean split of the company’s healthcare brands from its household and cleaning labels, after Kapoor’s decision to divide them into two separate units.

Narasimhan’s arrival will also fuel hope of an end to Reckitt’s blinkered culture. He will earn less than Kapoor would have had he hung around, which shows that the board has been listening to investor concerns.

Yet, only up to a point – once all the bonuses and other incentives kick in, Narasimhan can expect a total package of £16m in year three, enabling him to wrestle back Kapoor’s well-earned place among the FTSE 100’s most richly rewarded bosses. Old habits die hard.

Boohoo shines in retail horror show

Shares in online fashion upstart Boohoo are once again threatening all-time highs. It’s not hard to see why. Britain’s retail scene increasingly resembles a horror show. Names such as House of Fraser and BHS have succumbed to the rapid pace of change, while others such as Philip Green’s Arcadia brands are threatening to. Even Marks & Spencer has admitted it faces a fight for its very existence. Ted Baker’s shares plunged by more than a quarter on Tuesday following a shock profit warning, and clothing chain Quiz revealed that profits were obliterated last year.

Boohoo ticks all the right boxes. In fact, it now commands almost the same value on the stock market as its bigger, better-established rival Asos, an impressive feat given that Boohoo has been a public company for less than five years whereas its rival is approaching its 20th birthday and generates more than three times the sales.

The smaller Manchester-based company also makes juicier margins. Sales in the first three months of the year jumped 39pc to £254m, and were even stronger overseas where they rose by more than half. Meanwhile, revenue at its PrettyLittleThing brand is closing in on the main Boohoo division, and the fastest growing brand of all is another of its labels, Nasty Gal.

All of which bodes well for boss John Lyttle. If the former Primark executive succeeds in raising Boohoo’s stock market value to above £5bn or so in the next five years, he will pocket £50m. Even Kapoor might blush at that.

Time to level the playing field

If there’s one thing that the saga with Sir Philip Green’s embattled Topshop empire has demonstrated it’s the level of antipathy that exists between landlords and their high street tenants. Property owners have every right to feel aggrieved by the concessions they are having to make to prop up the flood of struggling chains, but retailers too have had enough of landlords getting fat on upward-only rents. It is time to level the playing field.