Abigail Townsend: At last Morrisons is ready to move with the times
Can the Heineken man refresh the parts that Sir Ken couldn't reach?
Sunday 11 June 2006
It took a battle - and one that threatened to become an epic of Spartacus proportions - but it has finally happened: Wm Morrison is to be run by someone outside the family for the first time in its 107-year history.
Last week's appointment of Heineken veteran Marc Bolland as chief executive marks the end of a bruising time for the supermarket chain, as it has battled to transform itself into something the City can recognise as a bona fide member of the FTSE 100. Morrisons now has a board complete with independent, non-executive directors and a newish finance director in Richard Pennycook.
So, with the final piece in place, you could almost hear the sigh of relief from deputy chairman David Jones, by and large the architect of this change, as he announced he would be stepping down.
Lord only knows why it had to be such a battle, though, and it is little short of a disgrace that a retailer as respected as Sir Ken Morrison behaved in such a dogged manner.
On a human level, I understand Sir Ken's reluctance to step aside. This is a business founded by his father that he ran extraordinarily well, and for years no one cared about dismal standards of corporate governance because, well, you don't when growth is unabated and the profits roll in.
Then, of course, Sir Ken decided to pursue the much bigger Safeway. The deal was too much and profit warnings rained down, to the horror of the City. Yet I can still see why Sir Ken did not want to go: it was his mess and he was bloody well going to clear it up. A Yorkshireman through and through.
But the simple truth is that Morrisons is not Sir Ken's baby. He may be a shareholder but he's not the only one. This is business - a company on which people's jobs, pensions and incomes depend. There were bigger problems than egos, but the board was forced to bicker about corporate governance and whether to have a chief executive. Pretty pathetic really.
So even though the takeover of Safeway happened two years ago, Mr Bolland joins a company that still has far to go. Sales are certainly improving, but that's against some feather-mattress-soft comparisons.
Mr Pennycook has already unveiled plans to slash costs and restore operating margins, but it is a sticking plaster: Morrisons needs a strategy, and only a chief executive can provide that. Because times have changed since the Safeway deal was completed: you don't just have to beat Tesco these days, but a revitalised J Sainsbury as well. Nor are consumers spending with quite the gay abandon of a few years back. The chain needs to keep finding ways to win over sceptical southern shoppers who are not convinced by the yellow-and-black lack of subtlety that is Morrisons. And this, I suspect, will be the hardest job of all.
And there's one more tiny point to remember: Sir Ken has not left. He has relinquished chairmanship of the executive board, and told shareholders he will go by January 2008. But that's a full 16 months away and so far there has only been confusion as to whether Sir Ken will take the title of non-executive chairman. Once Mr Bolland is on board in September, Sir Ken should go. But I wouldn't want to see the odds on that actually happening.
There is a bright side to all this: whatever Sir Ken does, the City has won. Investors have worked hard to make their displeasure known, and the company, if not Sir Ken, responded, however bitter the spats. If Morrisons prospers, it will have been worth the battle. And it's nice to see the City working as it should: making sure companies, and the men who run them, do not always get their own way.
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