Gaffe that caused downfall tells story that is pure gold
Gerald Ratner admits he thinks about ‘that speech’ every day.
The one time high flying chief executive of the world’s largest jewellery business famously brought his company to its knees when he mocked the quality of its products.
Just two jokes in a 40-minute speech to the Institute of Directors dinner in the Albert Hall in 1991 was all it took to ruin the reputation of Ratners, a household name which had a store in most big UK towns. It also lost Ratner his job, his fortune and his credibility in the business world.
“Nobody could have fallen from grace as dramatically as I did. I was a standing joke, which I still am to some degree. But I can live with it now,” Ratner told the Belfast Telegraph.
“Now I do laugh, that’s the difference. In the early days when it was destroying me, I didn’t,” he says. The businessman was in Northern Ireland last week as guest speaker at the Chartered Institute of Logistics and Transport’s annual regional dinner and, somewhat ironically, at an event for a group |of Belfast’s leading insolvency practitioners.
As well as his famous gaffe, his after-dinner spots focus on how he bounced back, first through a health club business, and now his new jewellery venture Geraldonline, launched in 2003.
“If I hadn’t made a comeback I don’t think people would be interested in just hearing about the demise. That somebody can come back from such a low ebb is what is interesting,” he says.
Prior to his downfall, Ratner made a huge success of his family business. Taking over as CEO in the mid-1980s he transformed it from 130 stores with sales of £13m, to a public company with 2,500 stores and sales of £1.2bn. By
1990, Ratners’ profits were £120m.
“People don’t ever bother about the rise. It’s a bit like saying the Titanic had hundreds of miles of pleasurable sailing before it hit the iceberg. That’s how ridiculous it would be for me to say I had built the world’s largest jewellery business. People only think about that speech,” says Ratner.
‘That speech’ included reference to a cut-glass sherry decanter being able to be sold at the knockdown price of £4.95 because its was “total crap” and a joke that a pair of Ratners’ earrings were cheaper than an M&S prawn sandwich but “probably wouldn’t last as long”.
They were, Ratner admits, old jokes that had been reported in the boom times of the late 80s in a fun way. But in 1991, when Britain was deep in recession, they were seized upon by newspaper editors keen to bring down so-called ‘fat cats’.
“That made it worse because they were looking for a scapegoat. It’s a bit like Fred Goodwin today in a way. I probably would be in just as much trouble if I said it now because we’re in a recession. The knives are out,” says Ratner. After the comments were reported, the value of Ratners’ shares slumped by £500m, he was fired by his board of directors and the company closed hundreds of stores.
The media frenzy was intense, with one of the more bizarre stories in the US media reporting he had stood up in the Houses of Parliament to announce his jewellery was crap. Ratner still contends he didn’t call his jewellery crap, but concedes it is splitting hairs to argue about which product he derided. He had crossed a line and there was no going back. It took seven years in the wilderness before he got back to business.
“The turning point was when I was lying in bed at 4 o’clock one afternoon watching Countdown and my wife got fed up with me. She said if I didn’t get up and get a job she was going to throw me out because she couldn’t stand me being around all the time. I wrote to 20 companies and got 21 rejections. At one of the companies the finance director and managing director felt they should both write to me to say they couldn’t believe I’d even applied.”
That drove him to start his own health club business, which he sold for almost £4m, giving him capital to start his new jewellery business. Geraldonline is now Britain’s largest online jeweller, although Ratner admits it hasn’t been immune to recession as internet customers expect to buy goods very cheaply despite high gold prices. The internet is also a |more complex place to operate, |he believes.
“In my old life it was about getting the right locations, getting good shops and property. In this business it’s about getting a good position on Google. That might sound a lot more simplistic than getting the right shop in Oxford Street, but it’s not.”
When Ratners was thriving the company’s best shop was actually in Belfast and Ratner spent a lot of time here in the late 1980s. “It could be because in the 80s a lot of retailers didn’t want to come because of the Troubles. But once you got here it was like any other place. We did really well and I expanded into places like Newtownards and Lisburn, smaller towns that I wouldn’t normally have considered”.
These days, aside from an appearance on the Celebrity version of The Apprentice for Comic Relief, Ratner is happy to maintain a lower media profile, although he takes on one speaking engagement most weeks.
In the depths of recession, he believes his story resonates with business people struggling to see light at the end of the tunnel.
“Many people think the world has come to an end, they might have lost their job, they might not have any money and they think they’re finished. I did feel that, not only because I lost all my money but because I was a laughing stock,” says Ratner.
“The point is your fortunes change. You’re not always going to be on the winning team, your luck is going to run out. People don’t realise that business comes in cycles. You get your breaks and you get your bad luck. If I can come back from where I’ve been, anybody can.”