December 10: Broker is mistaken on story of Morrison’s rise and fall

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From:Roger Owen, Former Group Property Director, Wm. Morrison Supermarkets Plc.

THERE won’t be many Morrison watchers or shareholders who have had much to smile about over the last two to three years, thanks to the appalling mismanagement of the business by the unlamented Dalton Philips, propped up by the equally clueless board chaired by Sir Ian Gibson. However the article (The Yorkshire Post, December 5), attributing comments to broker Keith Louden about a possible takeover and the mistakes made with the Safeway takeover, did have me choking with laughter over my cornflakes.

If any of this had come from the lazy “penny scribblers” in the City analyst offices, then I could understand but from a so called leading broker – no.

This was the repeating of an old theme from this gentleman who has always seemed to have a down on Morrisons even when things were much better.

If Mr Louden had taken the trouble to look back at the actual figures he would have seen that the post Safeway period went very well once the real depth of that company’s issues were out of the way, including the profit warnings and one year’s loss. Over 200 stores were converted by November 2005 in the largest project of its type ever undertaken in retail, in record time.

The second phase of store extensions began, store disposals, both mandatory and commercially motivated, were completed, generating income almost exactly half the purchase cost of £3.35bn making overall what I have called “the deal of the century”. Indeed the company reached 36 in the FTSE with a market cap of £12bn or so.

All of this was then underlined by the performance of the stores themselves which took off at a staggering rate of sales increase, all of which Mr Louden would and should have known if he had taken the trouble to check the accounts. Sales increases of huge proportions were the order of the day. Why? Because we gave the public what they wanted, yes, even in the South.

When Marc Bolland arrived in late summer, 2006, he injected a further impetus and the figures continued to forge ahead, indeed at the end of the financial year, February 1 , 2009, my retirement day, sales in a majority of Safeway stores were still showing increases year on year of significant proportions.

Only 18 months into the Gibson/Philips era did things start to go wrong and we all know what has followed, except Mr Louden apparently. Perhaps a re-examination of the facts would help.