A surprise management shake-up at JD Wetherspoon triggered speculation about a boardroom split over the pub group's strategy last night.
The exit of the chief operating officer Paul Harbottle and finance director Keith Down was disclosed in a short, two-paragraph statement to the stock market. The brevity triggered speculation across the City as analysts attempted to work out the reasons behind the changes and triggered a 4 per cent fall in the group's shares.
Paul Hickman at KBC Peel Hunt said he believed the departures reflected disagreements over "how far to use cost savings to protect margins" in the short term.
"The implication is that Wetherspoon will accept costs on items like repair and labour for the underlying good of the business, even if this brings short-term margin reductions in the face of, say, an inability to pass on VAT increases in January," he said.
Hugh-Guy Lorriman, an analyst at Seymour Pierce, said the news was "frankly disappointing". "Keith Down, as FD, has a high profile in front of investors and the analyst community. We felt that he was impressive in his role... He has been, in our view, a strong steady pair of hands," he said, adding that "In general, such wholesale and unexpected management change suggests the underlying story is more volatile/higher risk than the market had previously understood."
Wetherspoon's chairman Tim Martin said the two executives had left their posts with immediate effect. He did not give any reasons for the departures. The group's chief executive John Hutson will take on Mr Harbottle's responsibilities on an ongoing basis, while the deputy finance director Kirk Davis has been appointed interim finance director. "Change does happen and these are two changes, but there is still a considerable amount of continuity," Mr Martin said. Following the announcement, Wetherspoon shares fell by 17.3p to 437.4p last night.
OFT: Beer ties competitive
The Office of Fair Trading has ruled that the pub sector was competitive. The consumer watchdog will not take action after consulting on the findings of last year's investigation into the practice of leased pub operators tying tenants into buying their beer.
The consultation was prompted by a complaint by the Campaign for Real Ale (Camra). Its chief executive, Mike Benner, said: "Camra's initial reaction to the decision is it is based on blinkered and selective consideration... The OFT has squandered an opportunity to support a process of industry self regulation to... benefit consumers," he said. Despite the news, tenanted pub groups Punch Taverns and Enterprise Inns closed lower last night.