Interview: Gerald Ratner

"I made the speech. It went down really well," he recalls. "No one thought anything untoward about it. The jokes got laughs. The prawn-sandwich one, in which I said our 99p earrings were cheaper than a Marks & Spencer prawn sandwich and wouldn't last as long, got a bigger laugh than the sherry-decanter one."

So why did these jokes, which Ratner had used several times before, spark a chain reaction in which he was discredited and his company spiralled into decline?

Ratner has had 16 years to think about that. As he is talking, it is apparent that he is mentally separating his life into pre-speech and post-speech eras. He now feels that the time is right to tell his side of the story and has spent some time working on a book to that end - Gerald Ratner: The Rise and Fall... and Rise Again.

What happened after the speech was made, Ratner says, was down to the fact that, "basically, it was a good story for the Daily Mirror and The Sun. They misinterpreted my speech on purpose. It was 1991, there was a recession going on and they were having a go at so-called fat-cat bosses.

"When they saw the word crap in the speech - which was an unusual expression for a businessman to use - they saw it as an opportunity to have a dig at me and accuse me of making fun of my customers. Which was ridiculous."

Unfortunately for Ratner, the avalanche of bad publicity (the Sunday Times, for example, renamed him "Gerald Crapner") coincided with a severe economic downturn.

"I stayed with the company for 18 months," he recalls. "It was a difficult time and things were never the same as they were before. It was painful - we were closing a lot of Ratners shops and the business was going badly. But then we reconstructed, I brought in a new chairman and there was some light at the end of the tunnel. A lot of companies, including Next and French Connection, were also going through a bad time during this period but came out of it hugely successful."

But not Gerald Ratner. A year-and-a-half after the speech, he was called into the office of Jim McAdam, the man he had brought in to turn around the fortunes of the business. McAdam's message was blunt: "Gerald, I'm going to get rid of you. It just isn't working."

So ended the association with the company his father had founded and the only job Ratner had ever had. There followed five years of relative inactivity and poverty.

"I just couldn't believe it," says Ratner. "I was sitting at home one Sunday morning a few years before the speech, and I was thinking: ‘Am I dreaming all this? I've bought all these jewellery businesses, and made a huge success.' When it all went wrong, that, too, seemed like a dream... a huge roller-coaster ride that doesn't happen to many people.

"I remember walking through Hyde Park one day and just being so annoyed that I had lost it all over something as daft as a speech."

Ratner's salvation came from an unlikely direction - his bicycle. "I went cycling because I was at home a lot and I had time. The cycling kept me sane. I still cycle 28 miles a day even now. I was cycling this morning.

"Most people, including me in the past, worry too much about all the problems they have. Even though I am now running a reasonably successful business, I still take the time to ride my bike. I really enjoy it and it means I don't put on weight, though I do like eating."

With disarming humour, he adds: "I suppose the cycling is the one good thing to come out of all of this. It sounds ridiculous, doesn't it? I lost 500 million quid but I gained the cycling. I suppose most people would prefer to have the £500 million."

But, of course, someone for whom business was an obsession was not going to be satisfied forever with a constant routine of cycling and daytime. Neither was he satisfied with the monthly salary of £3,500 he was able to draw - all that remained of his Ratners fortune.

"My wife came in one day and told me she was going to leave me if I didn't get out of the house," Ratner reveals. "This was quite ironic - my first wife left me because I was never at home." Something had to change.

And when it did, Ratner cashed in on his notoriety: "After I left in November 1992, I did a few consultancy things which didn't amount to much. Then I had an idea for a health club. The thing about health clubs is that they are basically all the same - they have a pool, a gym, an aerobics studio, a beauty place. The fact that I had this fame meant that everyone in Henley [Oxfordshire, where the health club was to be situated] was talking about the health club. When it eventually opened in 1997, we had 2,500 members, which is one-fifth of the population of Henley."

When Ratner gets going, he gets going. "If you really think a horse is going to win, you put a lot of money on it. It's the same in business. I managed to borrow £155,000 against my house which took me into negative equity. You need that confidence. It was my salvation. I was a pariah. I went to countless banks and they all refused me money. They said no one would join my health club. In 2001, I sold it for £3.9 million."

He invested half the money in his new internet jewellery business, Geraldonline. Again, the banks were not interested. Again, he persisted: "I went to all the top institutions. I said I wanted to raise five million. I didn't get one penny. They told me that nothing would sell on the internet . The one thing I have learned is not to take a blind bit of notice of the banks and the City.

"Funnily enough, the business did really well, which is why I started writing this book in April. I didn't want to write it on a down note. Mind you, as soon as I started to write it, the business went through a bad time. At one point I thought I might have to come up with a different title, maybe The Rise and Fall and Rise and Fall.

"We've sorted it out now. It was all to do with a problem with search engines. Also, we are diversifying into shopping channels and I intend to buy a number of shops. I actually made a bid to buy back the UK wing of my old business -£350m, all fully financed. Things are going much better."

Ratner can thus claim to have made a multi-million-pound fortune not once but twice, and has run three successful businesses.

Not that there was any clue how this would come about during his school career. "I just wasn't interested in school whatsoever. I went to Hendon County Grammar and was expelled for being so stupid. It just didn't interest me. Even when I started work I wasn't that bothered. That all happened later.

"I had quite a Jewish upbringing and would go to synagogue on the High Holy-days. Everybody around me was Jewish. In those days, there was no such thing as a non-Jewish friend."

Numbered among the Jewish friends during his teenage years were Charles Saatchi, who would go on to make his fortune in advertising, and Michael Green, the future boss of Carlton.

When his friends started to do very well in business, Ratner found the motivation he had previously lacked. "When I started at work, I enjoyed it but I had no great desire to be successful," he says. "What changed was that, when I was heading towards 30, the thing became to be successful and drive flash cars and have some money. So I thought I would do that, too. It was as simple as that, really. I was determined."

Ratner's opportunity came sooner than he might have expected. His father Leslie, who had built up the Ratners business, became ill with a brain tumour. It was benign but affected his behaviour. "Before, he was very patient, understanding and kind," says his son. "Afterwards, he didn't have a fear of anything. In fact, he didn't seem to have a lot of feelings generally. If a bomb went off outside his house, he wouldn't have flinched."

So, at the relatively young age of 34, Ratner took over what was, on the face of it, a successful business. However, the 120-shop chain was losing hundreds of thousands of pounds. It looked as if the business would be swallowed up by its competitors. Instead, under Ratner junior, the reverse happened. Within seven years, there were 2,500 shops, and Ratners had a 50 per cent share of the UK market and 12 per cent of the US market.

"The business took me over completely. I'm the sort of person who gets completely obsessed, but the excitement of turning it around obsessed me at the cost of everything else. Even on Saturdays, I was visiting stores, and when I was at home my mind was still on the job."

He recalls studying competitors for ideas. "I could see the people who were doing well were the ones who were discounting and screaming about their offers. They were taking our business. We didn't have sales in those days. We used to turn our noses up - we thought they were really lowering the tone. Soon, we were having sales, too. In fact, we had sales 52 weeks of the year one way or another."

If his downfall taught him anything it was that there had to be more of a balance in his life. "Now, if I buy a camera," he says, "I will spend a little time working it out and enjoying it. Back then, it was just another thing to throw in the drawer."

So what is the most important thing in his life right now? The new business? Ratner thinks for a while: "At the moment, the most important thing in my life is my dog, which has had an operation on its leg. Then there are my four children and my bike. Oh, I forgot - my wife!"

He ponders and adds: "As someone once said, nobody lies on their death bed and thinks, ‘I really should have spent more time in the office.'"

Not that Gerald Ratner plans to give up work, even though he can now afford to. "I stopped when I was 41 - not by choice - and I didn't really start working again until I was in my 50s. So I feel I've already had my retirement. I'm now going to carry on working until I drop dead."

The Rise and Fall... and Rise Again by Gerald Ratner is published by John Wiley (£18.99)

Snapshot

Full name: Gerald Irving Ratner

Born: London, 1949

Family: Ratner's parents, Leslie and Rachelle, met in India during the Second World War. He had a sister, Juliet, and has a half-sister, Diane, from his mother's first marriage. Children from his first marriage: Suzy, 33 (named Suzanne after the Leonard Cohen song), Lisa, 30; from second marriage: Sarah, 18, Jonny, 16. First wife: Angela. Second wife: Moira

Education: Hendon County Grammar

Career: Began in Ratners' Oxford Circus branch at 15. Took over the business at 34, after his father became ill, turning a £350,000-a-year loss into a £125m profit.

After his infamous speech to the Institute of Directors' annual conference in 1991, he was unemployed until he launched a health club in Henley, Oxfordshire in 1997.

Launched internet jewellery business Geraldonline in 2004. Regular after-dinner speaker, commanding fees ranging between £5,000 and £10,000

On his Jewish identity:

"As I get older, I realise how important being Jewish is to me. I have a compatibility with Jews, an affinity and a relaxed feeling that I don't necessarily have with non-Jews. If anything, I'm getting more religious as I get older, but I only go to synagogue - in Maidenhead - about twice a year"