Boots crisis deepens after Dodd quits as finance director

First management victim after profits warning leaves chief executive under pressure

The crisis of confidence at Boots deepened yesterday when its finance director announced he was resigning, only 10 days after the company was shaken by a shock profits warning and dire trading figures.

The crisis of confidence at Boots deepened yesterday when its finance director announced he was resigning, only 10 days after the company was shaken by a shock profits warning and dire trading figures.

Howard Dodd, who has been finance director at the company for three years, will leave in May. He said he had been considering his position since the start of the year, and told Richard Baker, the chief executive, he was thinking of resigning when he returned to work after the school half-term break in February.

A week later, Boots told shareholders that operating profits at Boots The Chemist would miss forecasts by about 7 per cent and like-for-like sales had slumped over the previous six weeks. Its shares fell 4 per cent on the day.

Investors had been told in January that operating profits for the full year would be broadly in line with expectations. Analysts have slashed their forecasts for the year and a number expressed serious doubts over the credibility of Boots'management, believing its January statement was overoptimistic and did not provide a true picture of trading.

Richard Baker, who took over as chief executive in September 2003 and has been trying to lead Boots out of its trading slump, said: "Howard is leaving for personal reasons. He has been here for three years and his first 18 months at the company was a very turbulent period under previous management. We have worked together very well but turning Boots around is a long-term job. There are no quick-fixes and he felt he couldn't sign up for another three years. I accept that."

He denied that Mr Dodd was taking blame for allowing relations with City investors to sink to a low ebb. "We believe we have been open and honest with investors and we have been clear about how things are going. This is not an easy job and there will be bumps in the road," he said.

Mr Dodd was appointed in April 2002 by Boots' previous management, and prior to joining Boots his career experience had been in the chemicals and pharmaceuticals sector, with positions at ICI, Zeneca and Novartis. He earned £600,000 last year in salary and short-term bonuses, but will not receive a pay-off for his resignation.

Sources close to the company said Mr Dodd had been a disappointment to Mr Baker as well as to investors. "Howard Dodd was appointed by the previous chairman and so has always been in limbo since Richard Baker and the new team came in. Although Richard Baker had retail experience, he had no experience of running a plc board when he joined and so will have looked to his finance director to take the lead in relations with the City. But Howard seems to have miscommunicated the situation to investors and given analysts some nasty surprises. The City is very unforgiving on this kind of thing."

Mr Dodd's departure leaves Mr Baker all the more exposed should trading at Boots continue to struggle. This month's profits warning follows a stream of bad news from the company and disappointing results. Not only is it suffering from cut-throat competition from supermarket chains such as Asda and Tesco, whose buying power has dragged Boots into a price war, the company is having to reverse years of underinvestment in its core stores. Consumer spending is also showing signs of slowing and customers are spending less per visit.

Mr Baker said: "Our strategy is not going to change as a result of this. We are now looking for a new finance director, and I will be talking carefully with the board about what skills we want Howard's successor to have."