More bad news for Morrisons as finance director quits

In a company statement, Morrisons said Pennycook had informed the board that he would concentrate on building “a portfolio career”​ and “seek new challenges”.​

Pennycook joined Morrisons in October 2005 and will retain responsibilities for finance, IT online and strategy as part of a transition period until an appropriate successor is secured.

Sir Ian Gibson, chairman of Morrison, said: “Richard has done an outstanding job for Morrisons over the past seven years. He was the architect of the company’s optimisation plans and has played an increasingly strategic role in the last few years as Morrisons has completed its transformation into a nationwide retailer.”​

Falling sales​

City analyst Shore Capital described the announcement as “more unwelcome news for Morrisons”.​ Shore Capital analyst Darren Shirley said: “Mr Pennycook’s announcement comes at a time when the company is not trading particularly well, in relative or absolute terms.”​

Last month Morrisons posted a 1% fall in first quarter sales. Earlier this month its former executive chairman Ken Morrison expressed concern at recent developments at the supermarket’s annual shareholders meeting. 

On June 20 Shore Capital downgraded its recommendation on the supermarket’s stock from ‘hold’ to ‘sell’, saying that its trading performance and loss of market share was causing it growing concerns.

Reiterating its ‘sell’ stance today (June 25), Shore Capital said many considered Pennycook to be “a safe pair of hands”.​ He had brought “much needed control and stability to Morrisons after a period of turmoil post the Safeway acquisition”.​

Pennycook bridged the era of chief executives Sir Kenneth Morrison and Dalton Philips and Morrisons went out of its way to incentivise him to stay, according to Shore Capital.

Bigger problems​

“His departure is not at the heart of Morrisons’ problems at present,”​ said Shirley. “Although these problems may be acting as a push factor to Mr Pennycook, so accentuating the pull factor of new challenges.”​

The firm highlighted the disappointing current trading performance and how this rested with self-improvement, the competitive environment and the group’s vertical integration.

Julian Wild, food group director at legal firm Rollits, was not surprised by the news of Pennycook’s departure. Unlike Shirley, he did not think it was related to Morrisons’ recent troubles, but to the fact that Pennycook had failed to secure Philip’s ceo position. 

He told FoodManufacture.co.uk: “Pennycook was a potential candidate for the top job when Dalton Philips was appointed, so there was always a possibility that he would leave.​

“I was always surprised that he stayed on after Philips was appointed but presumably he wanted to see how things would develop.”​

Last week analysts questioned Morrisons’ strategy of investing in food manufacturing.

The Bradford-based supermarket now produces a fifth of its own products. It operates the former Rathbones bakery, purchased in 2005, four abattoirs, and a fish factory in Grimsby, which it acquired in March.

To read why analysts thought the strategy was putting Morrisons “between a rock and a hard place"​, click here​.