Morrisons under pressure after profit warning
British supermarket chain Morrisons was today under pressure to consider a boardroom shake-up after a second profits warning in less than a year shook investors.
The position of finance director Martin Ackroyd is seen as most under threat, although executive chairman Sir Ken Morrison is also facing calls to appoint a third non-executive director and review his senior management team.
Morrisons, the UK’s fourth biggest supermarket chain, will face shareholders on Wednesday with results it has already said will be below market hopes.
Last week’s profits warning – the second in its history and nine months after the first alert – stemmed from a review of sums owed to it by suppliers to Safeway, the chain it acquired for more than £3bn (€4.3bn) in early 2004.
The integration process has proved challenging for the smaller Morrisons business as it tackles supply issues and a store conversion programme. It now has more than 400 outlets and 150,000 members of staff.
Richard Singleton, a fund manager at F&C Asset Management, said: “Before the merger Morrisons was a tightly controlled business. But it seems that the controls that worked then are not adequate for the larger business.”
Another fund manager quoted in the Sunday Times said it was possible that the takeover of Safeway was a “step too far”.
Graham Ashby of Deutsche Asset Management added: “There’s no point in knee-jerk reactions. We will listen to the management. But questions clearly need to be asked.”
Sir Ken is loyal to his team and is likely to want to find a new role for Mr Ackroyd – who has been with Morrisons since 1974 – if he is forced to bring in a finance chief with experience of integrating businesses.
The pressure for change is said to have come from both shareholders and the company’s two non-executive directors, Next chairman David Jones and Duncan Davidson of the housebuilder Persimmon.
The pair are said to want the addition of a third non-executive director and the restructuring of the senior team to send a signal to the City on who will succeed Sir Ken, who has been chairman of the family firm since 1956.
Morrisons shares fell 6% on Thursday after an annual audit identified issues with the accounting methods the chain uses to deal with Safeway suppliers.
Until it has determined how the outstanding balances will be treated, Morrisons said it would take a £40m (€57.8m) provision in its results, leaving profits in the region of £320m (€462m).
