Knee surgery forces Sir Ken to miss first AGM in over 50 years

Speaking to the Yorkshire Post after the AGM, the former chairman of Morrisons said he wasn’t fit enough to attend following the operation a few weeks ago.

“It’s the first time I have missed it,” he said. “I don’t know how many years but it’s more than 50.”

Sir Ken, 81, caused a stir at the company’s AGM last June when he delivered a damning assessment of the supermarket group’s performance over the previous three years.

He accused the management of neglecting the core business. “I believe the company is preoccupied with many other activities and I fear neglecting the core business is dangerous,” he said at the time.

Chief executive Dalton Philips yesterday delivered a rousing presentation in front of 120 shareholders at the supermarket’s Bradford headquarters and insisted the company was focused on getting the core business of providing affordable fresh food right.

“(Last year) was a really tough year,” he said. “But we are focused on the core and on getting that core right. And we are focused on the future.”

He added: “We have got a superb base to build from. We have got great colleagues, we have got great stores and we have got a great balance sheet.

“So we have the platform to grow on. But it is going to be tough and it’s going to remain tough until all these pieces start fitting together. It’s going to be a challenging year(ahead).”

Britain’s fourth largest supermarket, which has 500 stores across the country, has suffered falling profits and market share, partly due to its late entry into the online grocery market, which is growing at about 16 per cent a year, and the convenience store format.

The company confirmed last month it is investing more than £200m in a 25-year deal with online grocer Ocado, as it attempts to catch up with its rivals in the home delivery market.

Morrisons, which already sells non-food items online, has held back from selling food because of doubts about the profitability of delivering groceries to customers’ homes.

“Our focus has to be on affordable fresh food,” Mr Philips told shareholders. “But the market is changing and how people shop is evolving and we have to adapt and adjust to that.”

He added: “People are shopping more often... and they are shopping in different places... in convenience stores and online.”

Although the concepts of convenience stores and online shopping are not new, Mr Philips said their intensity had changed.

Convenience currently accounts for 20 per cent of the grocery sector and is set to rise to 30 per cent in the next five years, he said.

By the end of 2012, Morrisons had 12 M Local convenience stores but in 2013 it will open 100, with half of those in the South, including London.

Meanwhile, the online grocery sector is set to double in size in the next five years.

“Our arrangement with Ocado allows us to go from a standing start to the fast lane this year,” Mr Philips said.

Morrisons is also investing in the integration of its systems, which are being used across its manufacturing and distribution sites, in stores and also in the support centre, which Mr Philips said would be saving the supermarket £100m by the end of the year.

“It’s a big investment but there are big savings that come out of that,” he added.

Last month, Morrisons reported another fall in quarterly underlying sales. Like-for-like sales fell 1.8 per cent in the 13 weeks to May 5, an improvement on the fourth quarter decline of 4.1 per cent.

Mr Philips said the company had refocused its promotional campaign in the last 12 months after he admitted it “wasn’t as strong as it should have been”.

New promotions such as the payday bonus and a new TV advertising campaign have been introduced.

One shareholder raised concerns that the supermarket did not have a store card like some of its rivals, but chairman Sir Ian Gibson said there were no immediate plans to launch one because it was too expensive.

Morrisons is also in the process of rolling out its fresh format stores, which showcase its butchers, bakers and fishmongers.

It will double the number of these stores to 200 by the end of 2013.

Turnover rose three per cent to £18.1bn during the year ending January 2013, while pre-tax profit fell to £879m from £947m. Morrisons increased its dividend by 10 per cent to 11.8p

Mr Philips said: “A third of our customers get to the end of the month and they have nothing left. Forty per cent of our customers are one pay check away from bankruptcy. It is tough out there.”

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