The new chief executive of Matalan yesterday pledged to address the discount retailer's poor corporate governance track record during the next few months.
John King, who replaced Paul Mason this year, said the company, which has had a stormy relationship with the City since floating, would "absolutely" look at improving the independence of its executive board. "We will look at Higgs [guidelines on corporate governance] in the second half. But first things first, we had to get the business back on track."
Two of Matalan's four non-executives fail the Higgs test of independence: Charles Thompson is from a venture capital group that backed the company in its early days and David Shipley is a former senior partner at the company's auditors, PricewaterhouseCoopers.
If recent City speculation about a possible takeover bid for the company from Wal-Mart's Asda or Tesco proves true, then the independence of its board will be tested because the family of John Hargreaves, Matalan's founder and executive chairman, controls 52 per cent of the shares.
Mr King's pledge came as Matalan reported a return to form after a disappointing summer. Like-for-like sales in the five weeks to 4 October rose 5.7 per cent after falling 6.7 per cent in the 26 weeks to the end of August. Mr King blamed a "heady cocktail" of poor fashion choices, cluttered stores and incomprehensible mail shoots for the dive in sales, which was behind a 23 per cent fall in profits during its first half to £41.2m.
Although the company thinks sales growth of 1 to 2 per cent is more sustainable going forwards, it said it had ironed out the problems behind the sales shortfall. Mr King said the second half was all about "trading aggressively". Taking a sideswipe at the group's former management team, he added: "It's not rocket science, just basic retailing disciplines that weren't in the business." Mr Mason was ousted in March after falling out with Mr Hargreaves.
Mr King suggested the previous management had struggled to keep up with the company's rate of growth after it floated in 1998. He said more competition in the value sector, home to a resurgent New Look, an expanding Peacocks and market-share hungry supermarket groups, had also taken its toll on Matalan.
Matalan said pay-offs to Mr Mason and Phil Clarke, the retail director, had totalled £2m, including share options.
Its shares rose 25p to 245p, their highest level in almost 12 months.