Kingfisher directors face axe

Investors alarmed by `rift' between two group chiefs
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Top managers at Kingfisher, the troubled Woolworth to B&Q retailing group, are fighting for their jobs this weekend as institutional shareholders prepare to demand radical changes in the wake of last week's profits warning.

Several large Kingfisher shareholders contacted by the Independent on Sunday say there now has to be change in the boardroom, though they fall short of saying which heads should roll.

Meanwhile there are mounting concerns about a possible rift between the executive chairman, Sir Geoff Mulcahy, and his chief executive, Alan Smith, who was brought in from Marks & Spencer two years ago for a package close to £1m.

Kingfisher shares plunged last week after the company announced that profits would be down by a third at Woolworth, and that its Comet electricals chain had fallen into losses after a sharp drop in underlying sales. They ended the week at 399p, compared with 778p a year ago.

A senior executive in one institution, a large Kingfisher shareholder, said there would be pressure for management changes: "I think the pressure could be quite extreme. Questions have to be asked."

The head of UK equities at another shareholder said: "It's a sad story. There's a feeling it's a group that has lost its way. I find it amazing that after 15 years they're no nearer finding a role for Woolworth.'' Sir Geoff had made a mistake in paying himself more than the psychologically important £1m mark, he continued. His total package last year rose from £863,000 to £1.3m.

"He also looks and acts as a loner. He doesn't appear to be part of a team. That's unfortunate for a boss of a large plc. But I would guess the City will give him one last chance."

A third institutional shareholder commented: ``We'll have to wait until we see the final figures in March. They are having rather an unhappy time. One wonders whether they have rather lost it. One wonders, too, whether Alan Smith is going to be booted out as a human sacrifice.''

One close observer of the company believes the changes will happen very shortly: "Departures are now inevitable, and in my book it's going to happen before the March prelims."

According to one source close to the board, there have been growing tensions between Sir Geoff and Mr Smith. "And after last week I'm sure those tensions have been heightened.'' Mr Smith has special responsibility for Woolworth, which suffered a series of setbacks last year.

However, Nigel Whittaker, the corporate affairs director and one of the original buy-in managers, denied any rift: "Geoff and Alan get on very well and are hard at work together," he said.

Mr Whittaker also denied that the return of Jim Hodkinson, the former chief of B&Q, and his appointment to the main board last September, had undermined the role of Mr Smith: "Jim Hodkinson reports to Alan, but Geoff takes a very close interest in B&Q and Comet.''

James Kerr-Muir, the finance director, could also come under pressure. Institutional shareholders compare him unfavourably with his predecessor, Archie Norman, who was headhunted to run the Asda supermarkets group in December 1991.

At the operating company level attention is likely to focus on Jonathan Weeks, managing director of Woolworth, and Brent Wilkinson, managing director of Comet. Mr Weeks is due to retire within the next two years.

No current shareholder was prepared to be named. However, Peter Seabrook, head of UK equities at Fleming, which was a major shareholder in the 1980s but sold out two years ago, commented: "Geoff's got a struggle on his hands. I'd be surprised if there were not some pressure for management changes, given the disappointing earnings record of the last five years."

Sir Nigel Mobbs, the deputy chairman and the senior non-executive director, was travelling overseas and was unavailable for comment yesterday.

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