Veteran Morrisons founder hits out at the board: 'Your strategy is a load of bull'
Struggling chain must go back to basics, he says, as CEO is humiliated
Friday 06 June 2014
Sir Ken Morrison and members of his family yesterday launched a sustained attack on the board of the struggling supermarket they once controlled and ran, in astonishing scenes at the company's shareholder meeting.
He attempted to humiliate chief executive Dalton Philips in front of hundreds of shareholders at the company's Bradford offices, calling the boss's strategy "bulls***" and hinting that he wanted the entire board to resign.
His nephew, Chris Blundell, who controls most of the remaining family stake in the supermarket, also told the board it needed rescuing, and welcomed the decision by chairman Sir Ian Gibson to leave the business next year after months of pressure.
Yorkshireman Sir Ken said: "When I left work and started working as a hobby, I chose to raise cattle. I have something like 1,000 bullocks and, having listened to your presentation, Dalton, you've got a lot more bullshit than me.
"The results were described by the chairman and chief executive as 'disappointing'. I personally thought they were disastrous. I warned in 2009 and 2012 that changes being implemented by directors would seriously damage the business and I'm extremely sorry to admit that my comments, whilst unwelcome, were absolutely right and today we have seen the consequences."
The 82-year-old, who built the business from a small family concern into the UK's fourth-largest chain over 50 years before stepping down in 2008, has hit out at the current management before but most observers agreed yesterday was his harshest critique.
After the meeting he refused to back Mr Philips and the board, arguing that the company must go "back to basics".
Morrisons suffered a £176m loss last year, and in March unveiled £1bn in price cuts in a bid to claw back customers amid diving sales.
Sir Ken was joined in his attack on management by Mr Blundell, who used to work for Morrisons too.
He said: "I think we're in a rescue situation here and it needs urgent action. Things need to be done very quickly. We are losing our reputation. A reputation is everything in business and I think you've lost that to a great extent."
A clearly shaken chairman Sir Ian said the strategy was the right one and would soon show results.
He added: "To say we are in a rescue situation – I'm sorry that's nothing but wrong. It is a very sound business and in the process of still growing."
The meeting started sombrely with both chairman and chief executive apologising for the poor performance over the last 12 months, which has seen 40 per cent wiped from the share price.
The company has been losing out to discounters Aldi and Lidl and to its traditional rivals Sainsbury's, Tesco and Asda due to its lack of online business or convenience stores, which they have recently launched.
However, after the meeting Mr Philips and Sir Ian attempted to play down the attacks, pointing out that they had both been re-elected by the vast majority of shareholders, including all top 20 institutional investors. Mr Philips said: "There is a well-documented difference on strategy between Ken and myself and I don't want to get drawn into a tit-for-tat exchange. My job is to deliver our strategy outlined to shareholders."
Sir Ian said he had not been put under any pressure to resign and that he was stepping down after eight years to avoid any further speculation.
He added: "I had to go within the next two years [under stock market rules] and this was the perfect opportunity. This was a debate with me and my board."
Mr Philips is cutting prices to the tune of £1bn over three years in the face of the exodus of shoppers to discounters like Aldi and Lidl. He has previously countered Sir Ken's criticisms of his management by pointing out that when he arrived, parts of the supermarkets group were 20 years behind the times, with cash being counted by hand in shops at the end of the day and stocktaking done with pen and paper.
The chairman's departure was seen as taking some of the heat from Mr Philips. Some in the industry are predicting the company could soon fall prey to a private equity takeover.
Analysis: 'Like shooting fish'
Attacking the current Morrisons' board in front of long-term shareholders, at the supermarket groups's AGM yesterday in Bradford, was, for founder Sir Ken Morrison, like shooting fish in a barrel.
However, despite poor sales figures, institutional investors are looking to CEO Dalton Philips to turn Morrisons' poor fortunes around.
In the wake of ally Sir Ian Gibson's departure, the onus is on Mr Philips to make significant improvements over the next year, before a replacement arrives.
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