Morrisons CEO latest victim of price warBy Neal Baker
The board of the UK’s fourth largest supermarket chain, Morrisons, has voted to oust Dalton Philips as CEO after the retailer performed the worst of the big supermarkets over Christmas.
The results mark the second year in a row that Morrisons has come last out of the ‘big four’ – including Tesco, Asda and Sainsburys – over the Christmas period, and also caps off a year in which sales declined sharply every quarter.
Philips admitted to reporters that he was “going to have a very large beer tonight” after the news of the 3.1% Christmas like-for-like sales decline was announced.
His critics have pointed to the supermarket’s failure to stem the tide of customers turning their backs on Morrisons in favour of discount stores like Aldi and Lidl, which continue to grow their market share.
Lidl in particular boasts an increasingly impressive value wine selection – an area that Morrisons tends to focus on least when compared to the ‘big four’.
However, market share for all the major supermarkets declined over the crucial period, while Reuters reports that over half of UK households visited either Aldi or Lidl in the six weeks to Christmas.
Defending his five years leading the company, Philips said, “I’m sad to be leaving but when the board taps you on the shoulder and says it wants change you have to accept that.
“Clearly when you make decisions there will be some wrong ones but I like to think I there were more right than wrong,” he said.
Philips and his board took the bold move last year to tackle the threat posed by stores like Aldi and Lidl by ordering massive price reductions and paving the way for profit warnings that spooked the market.
The Telegraph reports that figures show Philips not only failed to halt the march of Aldi and Lidl but Morrisons is also increasingly being squeezed at the higher end of the market.
Former chief executive Sir Ken Morrison hit out at the board during last year’s annual general meeting, calling Philip’s strategy “bullshit.”
Morrisons said it would close 10 loss-making stores, with 409 jobs at risk. However, no details were given as to which stores would be closed.
“I think Dalton’s had a good run … It’s a judgement call,” chairman designate Andrew Higginson, formerly of Tesco, who will succeed Ian Gibson as chairman of the company later this month.
With the current departures lined up, and the possibility of further positive changes on the horizon for the retailer, the market has reacted well. Shares in the company finished up over 4% on the day of the Christmas results and Philip’s departure.
Tesco, still suffering from troubles of its own after September’s profit statement scandal led to the suspension and sackings of several executives, will be relatively relieved to see only a 0.3% like-for-like sales decline.