Troubled Compass says headhunters are seeking replacement for Mackay

Sir Francis Mackay, the chairman and architect of the food group Compass, has promised to quit after two profit warnings that have enraged the City.

Sir Francis Mackay, the chairman and architect of the food group Compass, has promised to quit after two profit warnings that have enraged the City.

The company has appointed headhunters to search for a replacement to take over from Sir Francis next year, ending almost two decades with Compass, the last 14 as its most senior executive.

Compass says that Sir Francis indicated his desire to move on several months ago, rather than in response to more recent investor demands for a management reshuffle.

Compass lost a quarter of its value in one day last September after revealing a host of trading difficulties in UK operations, including smaller margins on school dinners, start-up costs on in-store restaurants, and the collapse of a supplier.

Despite assurances that the worst of the bad news was over, a second warning followed in March, blamed that time on the falling profitability of contracts to feed British troops in Iraq.

In a statement yesterday, Compass said Sir Francis would "step down from his position as chairman by the annual general meeting in February 2006. Since the start of the year the board has been discussing an orderly succession process. In line with that plan a formal search for a new chairman has commenced."

Compass is planning to appoint Sir Francis's successor to the board as deputy chairman, allowing for a handover period of several months.

Yesterday's confirmation that he would quit came after the search for a replacement leaked. The company had hoped to announce the search alongside Compass's interim results and a financial review, due on 18 May. Sources at the company again played down suggestions that it could announce disposals of some of its troublesome businesses.

Sir Francis joined Compass in 1986 as finance director and was part of the team that led the buyout from Grand Metropolitan in 1987 and subsequent flotation in 1988.

He has been the architect of its growth via a string of acquisitions since becoming chief executive in 1991 - most dramatically the merger with Granada's motorway service stations in 2000.

His friends were saying yesterday that Sir Francis, who is 60, has no plans to retire and would be looking for new non-executive positions. He is already chairman of a second FTSE 100 company, Kingfisher, which owns B&Q, and where his position has also been questioned by some shareholders in the wake of a profit warning there last month.