Morrisons in a sales surge as it loses its star Bolland

Simon English
19 Nov 2009

There was rising talk in the City today that the WM Morrison success story could be running out of steam, one day after it emerged that the chief executive is jumping ship.

The supermarket put a brave face on the sudden loss of Marc Bolland as it unveiled a set of numbers that show just why he was poached.

But analysts say sales growth is slowing, suggesting Bolland may be leaving at exactly the right time.

In the 13 weeks to 1 November, total sales jumped 9.1% as the 37 new stores opened this year kicked in with strong performance. Like-for-like sales, which strip out the effect of new store space, were up by a less exciting 4.3%.

That was below the 4.6% analysts predicted and down on the 7.8% growth posted for the first half of the year. There is a growing feeling that the future will be tougher for Morrisons.

Stockbroker Seymour Pierce said in a note to clients: “Marc Bolland, in our view, had achieved the easy win objectives based on his skillset. The company now needs a chief executive with the expertise to develop the non-food business and an internet strategy.”

Chairman Sir Ian Gibson is keen to unveil the new man as soon as possible to ensure the company doesn't lose momentum. The City is also anxious.

Shore Capital's Clive Black said: “We do not feel able to have a positive recommendation on the shares until there is clarity as to whom the new chief executive is and what that person's ideas and strategy for the company are, a strategy that even under Mr Bolland was far from clear and, indeed, a growing worry.”

Finance director Richard Pennycook, seen by many as an obvious choice for the chief executive's job, said of Bolland: “We are sorry to see him leave and we wish him well. But it won't surprise you to hear me say that Morrisons has got a great team. We are very focused on our customers and on Christmas we will not miss a beat.”

Asked if he was throwing his hat into the ring, Pennycook said: “It has all come up pretty fast. It was only yesterday. I will have a think about it. I have not had the chance to do so yet.”

Other candidates may include Stefan Barden, the chief executive of Northern Foods, and Steve Easterbrook, the head of McDonald's UK.

Morrisons traditionally has a Northern bias, but is moving strongly into the South and London. It welcomed a record 10.8 million customers through its doors each week in the last quarter. That's a gain of 1.6 million shoppers since it launched its focus on fresh food.

Bolland, 50, is a Dutchman who joined Morrisons from Heineken, where he spent 30 years.

The news of his departure sent Morrisons shares tumbling.

They kept falling today despite the chain's positive sales figures, off 6¾p at 383½p.

One City commentator said the company may struggle to attract top talent. David Buik of BGC Partners said: “It should not be forgotten that Morrisons is in Bradford. Nothing wrong with Bradford, but it won't attract too many candidates who have their stalls from a family perspective as well as a professional one.”