DAVID Potts’ appointment as the new CEO of Morrisons has been given the thumbs up by former bosses Sir Ken Morrison and Roger Owen, paving the way for a smoother relationship between Morrisons’ management and its former directors, who strongly criticised former CEO Dalton Philips.
Sir Ken, son of the group’s founder, welcomed the announcement.
“I think his appointment is a good thing. Morrisons needs some direction at the moment,” he said.
“In my opinion we need to go back to the old standards that have been lost in the last few years. We need leadership. Morrisons has changed for the worse.
“It’s the operational side of the business that needs leadership. David Potts sounds very suitable for that job.”
Roger Owen, the former property director, said: “David Potts’ CV says he’s the right man for the job. His appointment should revitalise the downtrodden, disillusioned and demotivated staff and that’s got to be applauded.”
Mr Potts, 57, has more than 40 years’ experience in grocery retailing after beginning his career stacking shelves at Tesco in 1973.
His appointment will reunite him with former Tesco senior executive Andrew Higginson, who is now chairman of Morrisons.
Mr Higginson said: “David is the best retailer I have worked with in 25 years in the industry.
“The team will follow him. He’s done every job in the business. The team will love him.”
Analysts also welcomed the news of Mr Potts’ appointment.
David Stoddart at Edison Investment Research said: “It is easy to forget, after the revelations of recent months, just how efficient an operator Tesco was a few short years ago when Higginson and Potts were there.
“Clearly, Higginson knows Potts well and is getting a known quantity. Although Potts does not have experience as a chief executive of a listed company, he does have chief executive experience (in Ireland and Asia) within Tesco. It is a sensible appointment.”
Mike Dennis at Cantor said: “We now expect a new strategy in 2015 to rebuild the product offer, service and sales growth. We believe the retail experience of Potts, with over 40 years of experience at Tesco and more recently as retail director of Tesco UK, puts Morrisons in a good position.
“We believe the potential for Morrisons to improve sales and profits is good.”
Mr Potts, who will start his new job on March 16, is the former boss of Tesco’s Asia operation. He left the group in 2011 after losing out to Philip Clarke as successor to long-time boss Sir Terry Leahy.
He has since acted as a retail expert to several international advisory and private equity businesses.
Mr Potts will receive a salary of £850,000 a year, the same as Mr Philips.
Mr Potts said: “This is a great British business with real potential and it is an honour to have been selected.”
The departure of Mr Philips after five years at the helm came despite recent signs of improved trading at the supermarket chain. His major initiatives included £1bn in price cuts over three years and a new loyalty card scheme called “Match & More”, promising to match discounters Aldi and Lidl.
One area that will be up for discussion will be Mr Philips’ decision to pay Ocado £216m to deliver Morrisons online groceries
Mr Potts will be looking at all Morrisons’ partnership deals and the 25 year contract with Ocado is thought to be generous.
Analyst Clive Black, analyst at Shore Capital, said: “Whilst the superstore estate is expected to be the prime focus of Mr Potts’ attention in the immediate future, we will also naturally watch with interest to see what Messrs Higginson and Potts do with respect to its e-commerce model and the 25-year no break clause contract with Ocado. To our minds we would be surprised if this model was deemed to be the way forward.”
Asked whether a new chief executive could renege on the deal, Ocado said the agreement is secure.