Succession problem at Morrison as 70-year-old chairman retakes control

William Morrison, the Bradford-based supermarkets group, suffered a serious setback to its management succession plans yesterday when it announced that its managing director, John Dowd, had been forced to resign from the board due to ill health.

Morrison's had announced in January that the highly regarded Mr Dowd, 58, would be away from the business for a number of months for major surgery, believed to be for heart trouble. Yesterday the company said Mr Dowd would not be able to return to his role, where he was in effect number two to the 70-year-old chairman, Ken Morrison.

The company said: "It is our sad duty to announce that John has not responded to treatment in the way first hoped. After consulting with both his family and medical advisers we have taken their advice that John needs to concentrate his efforts on recovery and have reluctantly accepted his resignation." Mr Dowd, who has been with Morrison for 30 years, will remain an employee and stay on the payroll.

The news means Ken Morrison will take on the managing director role himself, having said in January that he would assume the position temporarily in Mr Dowd's absence. Mr Morrison was the company's managing director between 1956 and 1997.

Analysts said the news was a blow to Morrison's management succession plans. One said: "The plan was that John was going to progressively take over (from Mr Morrison) and had been doing that since last autumn. They may need to look outside now."

Morrison's has been a tremendous growth story, with consistent increase in sales and profits in the face of competition from industry giants such as Tesco, J Sainsbury and the Wal-Mart owned Asda. It has steadfastly avoided things like loyalty cards. Instead the group has concentrated on low prices and good customer service.

The group has also flown in the face of corporate governance best practice by not having any non-executive directors on its board. Last September Mr Dowd said: "We're doing very well so far without them and we look at companies like Marconi and BT which do have them and we wonder what value they add."