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Friday, July 16, 2010

‘Doing a Ratner’

It’s not a new dance or something to do with the movement of dormice. “Doing a Ratner” refers to making a public gaffe that is so big it can alter the value of a company.

Gerald Ratner was the chief executive of Ratners Group, a very successful British jewelry retail chain that he grew from 130 stores with sales of $20 million into a public company with 2,500 stores and sales of more than $1.8 billion. Then on April 23, 1991, during a speech, he said the following:

“We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, ‘How can you sell this for such a low price?’ I say, ‘Because it's total crap.’”

He added that some of his earrings were “cheaper than a prawn sandwich.”

The media seized on the comments and it resulted in an estimated loss of $770 million of company value. He resigned in November 1992. A year later the company changed its name to Signet Group.

“Doing a Ratner” is now part of the corporate lexicon when referring to public gaffes by executives.

The Financial Times published a piece on Ratner Friday in its “20 Questions” management column (subscription required). Today, a much more humble Ratner owns the jewelry Web site Geraldonline with 15 employees. When he was head of Ratners, he had 27,000 employees. He also is a paid public speaker, which he finds “cathartic.”

In the interview, Ratner said he was shunned by Buckingham Palace and 10 Downing Street. Among the takeaways from the interview:

“It was a dumb thing to say ... If I talk about Ratner’s successes it’s like discussing the Titanic’s pleasurable cruising aspects. People don’t want to know.”

When asked about the expression, “Doing a Ratner,” his response was: “Someone told me that it would be used 500 years after I died. I had hoped death might give me a rest.”

Today, his former company is doing quite well. It's known as Signet Jewelers Limited with its headquarters in Bermuda and its primary listing on the New York Stock Exchange. It is the world’s largest specialty retail jeweler operating more than 1,900 stores in the U.S. and U.K. Its holdings include Kay Jewelers, Jared, The Galleria Of Jewelry in the U.S.; and H.Samuel, Ernest Jones and Leslie Davis in the U.K.

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