The humbling of Sir Ken: how the Buddha of Bradford became Morrisons' tarnished talisman

"If Sir Ken had his time again, I suspect he wouldn't have bought it - he's been exposed. He used to be hailed as some sort of retail guru, now he's looking foolish. So many things have gone wrong, and one of the biggest was probably arrogance."

"If Sir Ken had his time again, I suspect he wouldn't have bought it - he's been exposed. He used to be hailed as some sort of retail guru, now he's looking foolish. So many things have gone wrong, and one of the biggest was probably arrogance."

So says one retail analyst, who would prefer not to be named, of Sir Ken Morrison, 73. On Thursday, the boss of the supermarket chain that bears his name said he was relinquishing his day-to-day operational responsibilities - after surviving an investor revolt against him. Yet only last March, he was celebrating an extraordinary coup, beating off rivals to complete the £3.24bn acquisition of Safeway.

Almost immediately, things went wrong. The group said it had underestimated the dire state of trading at Safeway, and a profit warning, the first in Wm Morrison's 37 years as a public company, was issued. Three more would follow, until last week the chain admitted it could no longer provide "reliable guidance" on full-year profits.

"It looks as if it's drowning under the pressure of absorbing a much bigger business," says Richard Hyman, the chairman of retail research firm Verdict. "What Morrisons was, and continues to be, is an extremely lean, focused business that has tried to absorb a company with a very different culture and some major structural and strategic differences - without making any changes to its own business. It was short-sighted and it was naive."

Shares in the company have fallen 25 per cent since the deal was completed. But perhaps the bigger fall has been Sir Ken's. While still executive chairman, he has been forced to make changes: non-executive directors are being appointed; KPMG accountants have been brought in to help with financial forecasting; Morrisons' co-managing director, Bob Stott, was named chief executive; and Sir Ken has quit the operations board - the weekly get-togethers that, in his own words, "drive the business".

It is some decline for the son of the founder who has built up a reputation as a canny northerner and efficient retailer over the past 50 years. But for the City, it is justified.

The company's corporate governance record is dire and analysts complain of near non-existent communication with management.

Before the Safeway deal, which trebled the size of Morrisons, the City was more forgiving of Sir Ken's aloof attitude. Charles Stanley analyst Simon Procter says: "You had 36, 37 years of unbroken profits growth, so it was academic. One would have liked a different attitude to governance, but in the scheme of things, profit growth was a lot more important." Now the stream of bad news has shaken confidence in Sir Ken and the way the group is run.

Mr Procter talks of a "litany of disappointments" showing "a Morrison management team that was either ill prepared or insufficiently deep to cope with an integration of this magnitude. Eleventh-hour profit warnings resulting from unidentified supplier balances, and more recently, massive overlaps in running costs, have done little to inspire confidence in management mastery of the minutiae of the integration process."

Sir Ken has even incurred the wrath of Rrev, the corporate governance arm of the National Association of Pension Funds. It recommended members vote against Sir Ken at the annual general meeting - a position only softened at the last minute. "It's only in the past week that Bob Stott came to talk to us and then [deputy chairman] David Jones," says Rrev's chief executive, Tim Sawyer. "They realised they need the support of their shareholders. We're not out to get them - we want to help - but it's been quite difficult to engage with Morrisons up until now." Around 11 per cent of shareholders still voted against him, with many more voting against the remuneration report as well.

The City now expects Mr Jones, the ex-chief of Next, to continue shaking up the board. As well as securing a new finance director, the RAC's Richard Pennycock, he says all four non-executives will be announced in "weeks rather than months", after which he will turn his attention to planning the succession to Mr Stott, 62.

Yet it would be wrong to write off Sir Ken. It may look as if much has happened, but what has really changed? He makes all the right noises, remarking how his departure from the operations board is a "logical step" and saying he will give Mr Stott "headroom in which to work". But in the next breath he adds: "I'll no doubt feed some information in to them at certain stages. I'm not a person who walks past things and ignores them, I do note them and try to get attention drawn to them."

When the last profits warning was issued, Mr Jones convened the board and Sir Ken was, says an insider at the time, "very much driving this". The chief executive? He was on holiday. As one analyst notes, push too hard for Sir Ken's removal and investors might just get it - leaving no one to run the business.

A yellow card has been issued to Sir Ken. He has to ensure that no more nasty surprises are in the pipeline and nail down the Safeway integration, while Mr Jones must strengthen the board. If those strands come together, it might yet be Sir Ken, and not the City, choosing his retirement date.