UPDATE 2-Former Morrisons boss blasts "disastrous" performance

Thu Jun 5, 2014 2:00pm EDT

* Morrison family owns about 10 pct of the company

* Former boss says grocer has neglected core business

* Calls for more retail experience on board

* CEO says strategy has "very strong support" (Writes through, adds AGM detail; attention strong language in sixth paragraph)

By James Davey and Neil Maidment

LONDON, June 5 (Reuters) - Ken Morrison, the son of the founder and a former boss of Morrisons, on Thursday labelled the grocer's performance "disastrous" and called for its board to be bolstered with more "retail knowledge".

Morrisons is currently the worst-performing of Britain's so-called big four grocers, trailing market leader Tesco , Wal-Mart's Asda and Sainsbury's.

The company issued a huge profit warning in March, compounding share price falls that have robbed the stock of a quarter of its value this year and leaving it trading close to eight-year lows.

Ken Morrison, 82, ran the grocer for nearly half a century before stepping down in 2008. He now rears cattle in his retirement.

At the company's annual shareholder meeting in Bradford, northern England, he took the microphone after a presentation from beleaguered Chief Executive Dalton Philips.

"I've something like 1,000 bullocks and, having listened to your presentation, Dalton, ... I've got to give you the proper accolade and say you've got a lot more bullshit than I've got," he said, drawing warm applause.

Morrison, whose wider family owns about 10 percent of Morrisons' equity, said he had warned in 2009 and 2012 that changes being implemented would damage the grocer. He believes that management has neglected core stores as it belatedly grows convenience outlets and starts an online business.

"I'm extremely sorry to admit that my comments, whilst unwelcome, were absolutely right and today we see the consequences," he said.

"A really first-class business has been ruined by a lack of leadership from the top ... The company is no longer competitive on price, on quality or on availability."

He stopped short of calling for Philips's head but said: "I want more knowledge of retail among the board."

Philips told the meeting he was sorry the business had not performed better but did not respond directly to Ken Morrison's speech.

STRATEGY SUPPORT

After the formal meeting Philips told reporters: "There's a well-documented difference on strategy between Ken and myself. My job is to deliver on the strategy we've outlined to our shareholders and which we've had very strong support for."

Both Philips and Chairman Ian Gibson were re-elected, but 13.8 percent of proxy votes cast failed to support Philips, while 10.7 percent failed to support Gibson.

Ahead of the meeting Gibson said he would stand down as chairman at next year's AGM after eight years in the role.

Ken Morrison's intervention was typical of the tone of the three-hour AGM, with investors queuing up to criticise both the grocer's financial and in-store performance.

Last month Morrisons posted a 7.1 percent slump in underlying sales in its first quarter, hurt by price cuts intended to combat a loss of market share to discounters Aldi and Lidl in an overall food market growing at its slowest rate for 11 years.

Morrisons is investing 1 billion pounds ($1.68 billion) in price cuts over three years, with Philips aiming to close the price gap with discounters so customers will recognise its points of difference, such as its supply chain. Morrisons is unique among British grocers in making 60 percent of the fresh food it sells.

Philips, however, has also warned that like-for-like sales are unlikely to improve any time soon because lower prices will reduce the cash taken through its tills.

Tesco and Asda have also pledged to cut prices, while Sainsbury's has vowed to remain competitive, raising analysts' concerns about a possible price war hitting earnings across the sector.

Industry data published on Tuesday showed that Morrisons' sales fell 3.9 percent year on year in the 12 weeks to May 25, with its market share falling to 10.9 percent, against 11.6 percent previously. ($1 = 0.5956 British Pounds)

(Editing by David Goodman)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.