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Richard Pennycook has shocked the high street by standing down as chief executive of the Co-op Group on the day Aldi displaced it as the UK’s fifth biggest grocer. He will be succeeded by Steve Murrells, chief executive of the Co-op’s food business.

Mr Pennycook is credited with rescuing the group from collapse in 2013 after its bank discovered a huge hole in its balance sheet.

He had indicated he would stay to lead its so-called “Renewal Phase” after selling a number of businesses to cut debt and focus on its core grocery business.

The Manchester-based mutual said Mr Pennycook wanted to pursue a “portfolio career” with a number of directorships. He took a big pay cut this year at his own request, arguing that the hard work of rescuing the Co-op was done. He became chief executive initially on a temporary basis.

It is a much smaller group than he inherited, having dropped its farms and pharmacy chain. Its main business now are funeral care, legal and insurance.

Chairman Allan Leighton said Mr Pennycook’s departure reflected the board’s desire for a chief executive who would stay in post throughout the next stage of the Co-op’s “renewal” plan. “He’s done a phenomenal job. He saved the Co-op,” Mr Leighton said, “Richard didn’t want to commit to another 3 or 4 years, which I understand. It’s a classic piece of succession.”

Copyright The Financial Times Limited 2017. All rights reserved.
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