Two exits at Matalan

Breaking up is hard to do, says the song, and the line is true for dedicated company chairmen as well as lovers.

Certainly at Matalan, the chairman and founder of the discount retailer is having a tough time letting go. John Hargreaves has seen his business grow from a market stall in Preston to today's 163-superstore beast. He still owns 27 per cent of the company, and his family has almost an equal chunk.

But he is only in the office a couple of days a week and he has tried to pass some of the responsibility to a chief executive. He has failed, though. Twice. Last week he parted company with Paul Mason, who had been with Matalan for just over a year after being poached from the prestigious job of running Asda. That appointment was a coup for Mr Hargreaves, who said at the time he was "delighted".

But, a year on, delight has turned to disharmony. The two men fell out and Mr Hargreaves asked the non-executive directors to sort out the dispute. They decided in favour of the chairman, and the chief executive had to go.

The latest victim is not alone. His predecessor, Angus Monro, was also kicked out two years ago after a dispute with the chairman. The reason given by Mr Hargreaves at the time was that Mr Monro had said he wanted to be in the job for only two or three years, while the chairman wanted someone with a longer-term vision.

Although one divorce might be forgivable, two exits in a short time are causing concern in the City.

The official explanation for the exit of Mr Mason was that he was too much of a visionary and didn't look at the nitty-gritty of the business. But this statement caused surprise in some quarters, given Mr Mason's impressive track record. And sources close to Mr Mason say he had been pushing for the checks and balances necessary for a large business like the one Matalan has become, but that these proved unpalatable for the chairman.

In response, Mr Hargreaves has said that if he has similar rows with the next chief executive, John King, he will finally step down.

Tough words for a man who is so wedded to his business. But he needs to reassure investors because they are not best pleased. They had been comforted that Mr Mason was getting to grips with several areas of concern, such as how to compete with the likes of Asda and tackle the slowdown in sales growth.

The company was punished with a fall in its share price of some 25 per cent last week, to around 154p – quite different to its 800p high over two years ago.

It might be tempting for Matalan to go private, away from the harsh gaze of the stock market analysts. Mr Hargreaves denies he will do this, declaring it the "coward's way out".

But for some, his behaviour is taking the company in that direction. "Matalan is falling into an uncomfortable middle ground between a public and private company, and that's not doing anybody any favours," says Paul Smiddy, a retail analyst at Robert W Baird.

The chairman and his family might own more than half of the business, but Mr Hargreaves could find that investment banks make a loud minority.