CEO ditched after Christmas sales plunge - UK
Fin24 - Jan 14th 2015, 09:04
London - The intense pressure in Britain's supermarket sector claimed its first scalp of the year on Tuesday with the departure of Morrisons’ CEO Dalton Philips following a plunge in Christmas sales from Britain's No. 4 grocer.
Bradford, northern England, based Morrisons said it needed a new leader to return the supermarket to growth after it lagged larger rivals Tesco, Wal-Mart's Asda and Sainsbury's under Philips's five-year watch.
The firm, which has been slow to expand into stronger parts of the market such as online shopping and convenience stores, posted the worst Christmas performance of Britain's listed supermarkets, with sales at stores open over a year, excluding fuel, down 3.1% in the six weeks to January 4.
That was slightly better than analysts' average forecast of a 3.8% fall and a third-quarter drop of 6.3%.
But after a 5.6% decline last Christmas, which made the comparison base for this year's sales easier, the board decided the time was right for change.
"Our task now is to restore trading momentum in the business and return the business to growth," said chairperson designate Andrew Higginson, a former Tesco finance director, who will succeed Ian Gibson as chairperson on January 22.
Morrisons' shares, down a quarter over the last year, were up 5% to 185.8 pence at 09:30 GMT.
"Harsh though it may sound, we would expect the share price to outperform on the back of the CEO change ... as it may herald a more aggressive approach from management," Barclay’s analysts said.
Britain's £174bn grocery market is growing at its slowest pace for two decades as recession-era shopping habits have become entrenched and consumers prefer to spend any increases in disposable income they do have on non-food items.
The so called "big four" grocers, Tesco, Asda, Sainsbury's and Morrisons, have all seen their sales squeezed between the fast-growing discounters, Aldi and Lidl, and premium-end players Waitrose and Marks & Spencer.
Morrisons' Christmas sales lagged its bigger rivals. Tesco reported a 0.5% fall in same-store sales for the festive period, while Sainsbury's posted a 1.7% drop for its latest quarter.
Morrisons, which announced it would close 10 loss-making stores, said it had started the search for a new CEO and Philips would remain in his role until year-end results in March.
Higginson added he was "almost certain" the new CEO would be an external appointment.From Fin24.com
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