In the spring of 1991, a highly successful CEO stood before thousands of business leaders and delivered a speech that would instantly cause his multi-million-pound company to collapse. He transformed a massive jewelry business into an international news story in a matter of seconds. This is the true story of Gerald Ratner, the man who wiped out a vast fortune simply by telling a joke.
Building a Massive Jewelry Chain
Gerald Ratner joined his family’s business in 1966. By the 1980s, he had built the Ratners Group into an extremely successful chain of jewelers. He served as the CEO and shocked the traditionally staid jewelry industry by using fluorescent orange posters to advertise cut-price bargains.
His aggressive approach worked perfectly. The company expanded to include over 1,000 shops across the United Kingdom and the United States, acquiring well-known brands like H. Samuel, Ernest Jones, and Kay Jewelers. Although some critics called the stores tacky, the public bought the low-priced goods in massive numbers.
The Royal Albert Hall Speech
On April 23, 1991, Ratner was invited to address a conference of the Institute of Directors. He stood on the stage of the Royal Albert Hall in London, a historic venue with an architectural height of 135 feet (41 meters). During his speech, he decided to inject humor regarding the incredibly low prices of his merchandise.
He described a £4.95 cut-glass sherry decanter set, complete with six glasses and a silver-plated tray. Ratner told the audience that people often asked him how he could sell the set for such a low price. He answered his own question by stating, “because it’s total crap.”
The Prawn Sandwich Joke
He did not stop with the decanter. Ratner compounded his error by mocking another product sold in his stores. He mentioned a specific set of gold earrings and noted that they were cheaper than a prawn sandwich from Marks and Spencer’s.
He then added that the sandwich would probably last longer than the earrings. He appeared on the television chat show Wogan the very next day to apologize and explain that his comments were merely a joke, but the public reaction was already set in motion.
The Financial Collapse of Ratners Group
The consumer reaction was immediate. Customers completely stayed away from the shops. Following the speech, the value of the Ratner Group plummeted by approximately £500 million, bringing the massive company to the brink of collapse.
Ratner hired a new chairman to stabilize the situation, but he was dismissed by that same chairman in November 1992. The company dropped his name in September 1993, rebranding as the Signet Group. Today, the phrase “doing a Ratner” is an official dictionary term in the UK for making ruinous comments about one’s own products.