Exclusive: Battle for Morrisons - Sir Ken’s aide wants new board out

Former Morrisons director Roger Owen. Picture by James Hardisty. Below: Dalton Philips and Sir Ken Morrison
Former Morrisons director Roger Owen. Picture by James Hardisty. Below: Dalton Philips and Sir Ken Morrison
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The man who helped Sir Ken Morrison transform a family supermarket business into a £15bn retail giant has launched an extraordinary attack on the current management of Morrisons and called on the chairman to resign.

In an exclusive interview with The Yorkshire Post, Roger Owen compared the Bradford-based grocer to “a supertanker heading towards an iceberg” and claimed Sir Ian Gibson must take the ultimate blame for the decline in fortunes.

Dalton Philips.

Dalton Philips.

Mr Owen, group property director for 22 years until his retirement in 2009, decided to speak out after becoming increasingly concerned at the downward slide in sales, profits, market share and stock market value.

Morrisons’ share price hit an eight-year low this week.

Mr Owen, who holds about 90,000 shares, accused the FTSE 100 company of poor governance and confused tactical thinking, criticised the roll-out of convenience stores, questioned the foray into online shopping and said he thought chief executive Dalton Philips should have been sacked two years ago.

A Morrisons spokesman described his comments as unwelcome, unhelpful and “reflect a different era in retailing”.

Sir Ken Morrison

Sir Ken Morrison

Sir Ken declined to comment when contacted this week, but said “I will certainly buy The Yorkshire Post on Saturday”.

Mr Owen heaped praise on Leeds-based rival Asda and its expansionary response to the growing challenge from German discounters Aldi and Lidl and urged Morrisons to start fighting back “instead of catering for decline”.

He poured scorn on the group’s multi-million pound marketing tie-up with Ant and Dec and claimed that the Geordie entertainers had limited appeal.

He alleged Morrisons stores stock many products that do not sell, condemned the “permanent inconsistency” of availability and claimed staff cuts are demoralising the workforce.

Mr Owen also lambasted the imported US practice of “misting” fresh produce, which he said creates damp, rot and waste.

He questioned the group’s “promised saviour of online and convenience” and said home delivery might generate sales but little, if any, profit, while smaller stores “would be alright if the locations were good… but in many cases… they are at best secondary and at worst a fail”.

He said he believed Mr Philips, who was appointed CEO in 2010, should have invested more money in the group’s core business.

Morrisons bought online baby products retailer Kiddicare and a stake in New York-based home delivery firm Fresh Direct in 2011 but announced last month that it was exiting these “non-core activities”, contributing to annual writedowns of £903m.

Like-for-like sales fell 2.8 per cent last year. The group warned that its profits this year will be half the level expected by City analysts. Net debt, meanwhile, had ballooned to £2.8bn by the end of February.

Mr Owen said Morrisons has no focus, which he blamed on the structure of the board with only two executive members - he claimed there was not enough challenge from the board on executive strategy.

In his view, Sir Ian Gibson, the chairman of Morrisons since 2008, should take the blame.

Mr Owen said: “He should not be putting himself forward for re-election. If he does put himself forward, I hope sincerely that he is going to be voted off the board.”

Morrisons is Yorkshire’s biggest listed company and one of the region’s largest employers.

The Iceman complaineth: ex-Morrisons boss in extraordinary attack on successors

HE was known as the Iceman because of his challenging corporate style.

But Roger Owen’s no-nonsense approach certainly delivered the goods at Morrisons.

When he joined as estates manager in 1975, the business amounted to a small Yorkshire grocer with a dozen stores.

By the time of his retirement as group property director in 2009, Morrison was a supermarket giant with 380 stores, another 50 in the pipeline and sales of £15.7bn.

“You could say I have built that company. But I don’t view it like that. It’s not my style,” he told The Yorkshire Post.

Mr Owen said he worked on the basis that when he stepped down from the company after 34 years he was yesterday’s man.

“When you’re gone, you’re gone and you cannot be the albatross circling the ship all the time,” he said. “I was determined I wasn’t going to get involved.”

A year after his departure, Morrisons appointed Dalton Philips, an Irishman with an international career in retail, as chief executive, replacing Dutchman Marc Bolland who had departed for the top job at Marks & Spencer.

Sir Ken Morrison, the former chairman, was full of praise for the new CEO at the annual general meeting in 2010, describing him as “the new golden boy”.

But the performance of Morrisons started to falter as Mr Philips tried to modernise the business.

When Mr Owen left, the company was at 36 in the leading FTSE share index. “Today it is 81 and it is heading for the exit door and that is disastrous,” he said,

That, along with his status as a shareholder and his expert insight into the business, prompted him to speak out.

Mr Owen privately expressed concerns with a former colleague about the direction of the company in spring 2012.

He singled out the misting of produce, staff cuts and the sliding share price.

Sir Ken voiced his own fears at the AGM in summer 2012, warning the management against neglecting core customers.

In January 2013, Morrisons admitted to “disappointing” Christmas sales, triggering a private missive from Mr Owen to a non-executive director.

He expressed his concerns about the drift towards relegation from the FTSE 100, his loss of confidence in Mr Philips, the “lunacy” of the Ant and Dec marketing campaign, the range and availability of products in stores, confusing communications about development programmes and the CEO’s decision to blame the lack of online and convenience stores for poor trading figures. He was assured that performance would improve.

He said a trip to a Morrisons in-store cafe in Wetherby later that year confirmed his fears that things were going from bad to worse.

The 65-year-old described the visit as “the final straw” and wrote to chairman Sir Ian Gibson last November about his “increasing sadness at the unarguable decline of the company I helped build”.

He listed the fall in sales and profits, decline in market share, staff cuts and the impact on availability, the use of agencies, the slashing of building work and demoralised workforce.

He claimed that Mr Philips was “out of his depth” and urged Sir Ian to “act or be prepared for some rough water for the City”.

Last month, Morrisons sparked a sell-off of shares across the supermarket sector after announcing a £176m loss for the year ending February 2014.

Investors ran scared amid fears over the impact of discount chains Aldi and Lidl on the Big Four supermarket players after Morrisons slumped into the red.

Mr Owen, who was the company’s second-longest serving executive director, contacted The Yorkshire Post earlier this month to go public with his concerns.

He said the “disaster” at Morrisons is recoverable, but with none of the present board in place.

Mr Owen said he was not speaking for Sir Ken.

‘Seige mentality at old Morrisons’, says former property chief

MORRISONS developed a siege mentality during previous downturns and would come out fighting against discounters threatening its territory, according to Roger Owen.

The Yorkshireman was one of Sir Ken Morrison’s longest-serving lieutenants, serving as group property director from 1987 to 2009 and was on the board of management from 1979.

Mr Owen told The Yorkshire Post: “It was ‘nobody loves us but we don’t care’. We knew exactly what we were going to do.

“We would be fighting things out in the board meetings. Some of the meetings we had were grievous, but as Ken used to say, ‘do what you like in here, but when the door opens, we’re together’ and we were.

“That was the strength of the business. That’s important because that’s where it’s now the weakness of the business.”

Mr Owen said when he was on the Morrisons board “we analysed stuff, we fought about it, it got bitter sometimes, but we always kissed and made up”.

He questioned whether the current board, led by chairman Sir Ian Gibson, subjected the executive to the same level of challenge and scrutiny on company strategy.

He said fighting discounters like Aldi and Lidl is not new, recalling Morrisons’ battle against Kwik Save.

“It’s just the name that is different. So what did we do? We maintained the standards, we looked at the prices; we have got the winner against any of these: it is called product range - it’s massive,” said Mr Owen.

“You have got far more choice in a Morrisons store than you will have in any of the discounters, ever. So why be frightened of them? Take them on, get in there.”

He said Morrisons used to buy sites and start building work during previous downturns to take advantage of hard times when land owners were looking to realise capital assets and builders were strapped for cash.

“It was ‘come on son, get on your bike, get it done’,” added Mr Owen.

“Instead of catering for decline and falling into a spiral of decline, let’s go the other way.”

Morrisons: Owen’s comments unhelpful, unwelcome and out of touch

MORRISONS last night hit back at ex-director Roger Owen, describing his comments as unhelpful, unwelcome and out of touch.

A spokesman for the FTSE 100 company told The Yorkshire Post: “Judging modern retailing through the lens of the past is never very enlightening.

“These are unhelpful and unwelcome comments reflecting a different era in retailing.

“He might be better served taking more of a thoughtful view of his role as a director of a board that left Morrisons, uniquely among the big grocers, with no online and no convenience offer.”

Last month, chief executive Dalton Philips said when he joined Morrisons four years ago the company had no presence in online and convenience and had antiquated systems.

He said: “We’ve addressed those first three. We now have world leading online and a fantastic position on convenience.

“The fourth area to address is the discounters. We’re now dealing with it. This is the right thing for us to do.”

Asked whether he was worried about his position, he said: “Absolutely not.”

Mr Owen’s chief criticism centres on a lack of focus at the heart of Morrisons. This is not something that Sir Ken Morrison suffered from, he said.

“He is the retail great. Not just for his achievements, but his longevity. Sheer determination and on occasion bloody-mindedness because he knew where he wanted to be and wasn’t prepared to be deflected and that is one of the major failings today - they are a team with butterfly minds. They go from flower to flower and get nowhere,” said Mr Owen.

In contrast, he added: “Ken was the king of the butterflies and didn’t flutter, stopped in one place, focused on what he was doing and executed it well.”

Morrisons shares hit an eight-year low this week after City analysts flagged concerns over earnings quality.

The share price closed at 196.4 pence, giving the group a stock market capitalisation of £4.58bn, down by nearly a fifth since the start of the year.