Sir Ken Morrison heeded calls from disgruntled investors and loosened his grip on the day-to-day running of Wm Morrison on Thursday, as the company he has led for nearly half a century told the City it could not offer any guidance on profits in the current year.
The executive chairman, 73, who has come under fire from shareholders in recent months to improve corporate governance at Britain’s fourth biggest supermarket group, told the annual meeting he was stepping down from the operational board.
“What changes, is that I don’t go to the weekly operations meeting which drives the weekly business,” he said. “But I am not the sort of person that walks past things and just ignores them.”
Sir Ken said he - together with Bob Stott, chief executive - was determined to see through Morrison’s £3.35bn acquisition of Safeway. He was tight-lipped on his retirement date, saying he would make an announcement at next year’s annual meeting. Mr Stott will stay as chief executive until 2007.
In further governance moves, David Jones, Morrison’s deputy chairman and sole non-executive, said he was determined to press on with getting four new non-executives and promised to start making appointments within “four to six weeks”.
Morrison also said Richard Pennycook would join as finance director in October, after Martin Ackroyd was edged out in March following two profits warnings.
The company’s leading institutional investors were broadly supportive of the changes, although Paul Mumford, of Cavendish Asset Management, said they left Sir Ken with “a strong hand on the controls”.
Morrison - which has endured four profit warnings since last July - has hired KPMG to help it with financial forecasting after admitting its internal accounting resources were under strain following the Safeway acquisition.
“This is impacting the ability of the board to forecast likely trends in profitability and the directors are therefore not currently in a position to provide reliable guidance,” it said. An update will follow in October.
Analysts expressed disappointment. One said: “There can’t be that many FTSE 100 companies that, four months into a financial year, can’t give a forecast on what their profit will be. This is not good at all.”
Goldman Sachs downgraded its current year forecast by £42m to £266m due to higher-than-expected costs. Some analysts took the view that Morrison, which made a pre-tax profit of £279m last year, could slip into a net loss this year after exceptionals.
Morrison said total group like-for-like sales excluding fuel rose 2.3 per cent in the 15 weeks to May 15. However, underlying sales in the core estate slipped 2.3 per cent.
Mr Stott insisted Morrison’s “had not taken its eye off the ball” at the core chain and said falling sales were largely due to fiercer competition. The shares closed unchanged at 187.57p.
Additional reporting by William Hall and Sundeep Tucker