Liked At Virgin
DESPITE a most unorthodox start to his career with Richard Branson's Virgin Group, Dubliner Simon Burke has risen to become a key player in the company.
Mr Burke (38) has just become head of Virgin Retail and Virgin Cinemas worldwide - two divisions of the Branson empire which have a combined turnover of almost £1 billion and about 10,000 staff
Officially he doesn't finish his old job as chief executive of the Virgin Our Price retail chain until November, but in practice he will have two jobs for the next few weeks. His current lofty position is perhaps surprising, given his first brush with the company
Nine years ago Mr Burke was working in the City of London as an accountant for Coopers & Lybrand but wanted to get out into industry. A recruitment agency suggested he go for a corporate finance job at Virgin, which was then available. An interview with Mr Branson was arranged, but as Mr Burke recalls, things did not progress as he anticipated.
"I went to see Richard Branson at his house and I was late, which with Richard is an absolute sin. I knocked on the door and he answered it himself, so I apologised for being late. Richard asked me whom I was there to see, so I explained that I'd come for an interview with him."
Mr Branson appeared a little bemused by the news and motioned the young Dub liner to go into a room and said he'd be with him in a minute. But things got worse for the nervous interviewee. "It was a room for kids so all the furniture was half sized. I was convinced it was some sort of psychological test and that someone was watching me or filming me to see how I'd react."
Eventually he squeezed himself into a tiny plastic chair, not sure whether it this was the right course of action.
Mr Branson returned about 20 minutes later. "The problem was that somebody had cancelled the meeting and hadn't told me," according to Mr Burke. An interview of sorts then took place which largely consisted of Branson asking Burke when could he start. The children's room had been just that a room for children.
Burke took the job because he had "a good feeling about it". As the retailing division was in trouble in 1987. most of the new recruit's time was spent with that division as he oversaw the sale of all of Virgin's smaller record stores to the Our Price chain, then owned by W.H. Smith.
A year after joining the company Mr Burke was asked to run the retail division, which then consisted of 10 shops, eight of which were Virgin Megastores. "I went in for six months, but stayed for eight years."
The division was by Burke's own admission a nightmare" and the man charged with turning it around was a 29-year-old accountant who had never bought a rock album in his life. The situation wasn't improved by the fact that as he had already helped sell off part of the company to Our Price, his employees weren't too keen on their new boss. "They thought I was a hatchet man ... who'd come in to finish them off. That put a huge distance between me and the staff.
The company was in such a mess, according to Mr Burke, that making an impact wasn't too difficult. One shop had leased its best floor space to an electrical retailer so washing machines and white goods had the prime site and the music was "tucked in corners".
Also, a telephone jukebox system which the company operated, attracted no calls and therefore no revenue. Neither the fridges nor the phone service lasted long under the new management.
But the easiest cost saving was made at Virgin's flagship store on Oxford Street. "They had a CD factory in the basement actually manufacturing CDs in a clean environment behind a screen so they could be seen by customers. Think about it, a factory on Oxford Street. The costs were incredible ... the poor MD of Virgin records had to buy these things and they were still losing an absolute fortune.
The structure in the Virgin Group is for Mr Branson and his key strategists to leave individual managers to run their businesses without interference from on high. So during the early months in his new job, Mr Burke says he was "very alone". But after several months it became clear to staff that he wanted to sort out the division's problems rather than have a fire sale, and relations improved.
Two years ago, the rejuvenated Virgin Retail business in Britain and Ireland was merged with W.H. Smith's Our Price to form the Virgin Our Price chain which has 320 stores, including seven in Ireland. Although Virgin only owns 25 per cent of the venture it was their man - Simon Burke - who became chief executive as opposed to an executive from either W.H. Smith or Our Price. Mr Burke also took a seat on the main board of W.H. Smith.
Since its creation, the Virgin Our Price chain has grown to become the largest entertainment retailer in Britain. Al though W.H. Smith recently reported a lacklustre set of results for the year to the end of June with a £15.7 million drop in profits to £98.8 million, Virgin Our Price performed better than the parent. Sales grew from £413 million to £440 million while profits rose from £11.3 million to £16 million.
When Mr Burke's resignation from Virgin Our Price, and the W.H. Smith board was announced last week, one British paper quoted a W.H. Smith insider describing him as "being regarded as a jewel on the board".
Although he admits that it is difficult leaving the company which he helped turn around, his new job was too much of a challenge to pass up.
His position will still give him a role in Virgin Our Price, as the Virgin group still owns 2 per cent of the chain as well as stores in the US, Japan and eight European countries. He will also oversee the development of the Virgin Cinema chain, formerly MGM.
CINEMA is closer to Mr Burke's heart than rock was before he joined Virgin and he is clearly very excited. about that side of the company. Virgin has 25 multiplexes, including Dublin and Belfast with plans to double that number over the next five years. International expansion is also a possibility.
Mr Burke is also keen to be an innovator in cinema. "Nothing has changed - mutiplexes just multiplied what was there before." Virgin has inherited its multiplexes from MGM and even recently-opened operations such as Dublin were not designed to Virgin specifications from scratch.
The first "new generation" Virgin cinema should open before the end of next year, and Mr Burke is hopeful that one of the new breed will be located in Ireland. "We need to make an experience of going to the cinema ... when they come in to the cinema people should feel I'm in a bit of Hollywood here."