Britain’s fourth-biggest supermarket group said on Thursday the slowdown in third-quarter growth was due to a rapid decline in food price inflation and that it was still winning customers.
“He’s been a great member of the team and we’re sorry to see him go,” Finance Director Richard Pennycook said of Bolland, who is credited with turning Morrison around after its botched acquisition of Safeway in 2004.
“There’s real strength and depth of management and we have ample ideas for the future,” Pennycook told reporters, pointing to the group’s expansion plans announced in March, which include a move into smaller stores in city centres.
Some analysts, however, are concerned about Morrison’s longer-term growth potential as all the major supermarket groups jostle to open new stores and the group continues to lag behind on non-food ranges and has not articulated plans to go online.
“We do not feel able to have a positive recommendation on the share until there is clarity as to whom the new CEO is and what that person’s ideas and strategy for the company are; a strategy that even under Mr Bolland was far from clear and, indeed, a growing worry,” said Shore Capital’s Clive Black.
Pennycook said he would “of course” think about applying for the top job and denied there would be a management vaccuum.
Bolland was staying until the end of January and would be working as normal, rather than on “gardening leave.”
“He hasn’t got a garden,” Pennycook said.
RBS analyst Justin Scarborough said Bolland’s departure was a disappointment, but that much of the initial change following the Safeway deal was instigated before his arrival in 2006, and some of its by Pennycook himself.
“Morrison ... remains in good shape,” he said, keeping a “buy” rating on the shares, which fell around 5 percent on Wednesday following news of Bolland’s departure.
At 0840 GMT the stock was down 0.4 percent at 279.8 pence.
Sales at stores open at least a year, excluding petrol and VAT sales tax, rose 4.3 percent in the 13 weeks to Nov. 1.
That was down from 7.8 percent in the first half and below the average forecast of 4.6 percent in a Reuters poll.
But Morrison said the slowdown was due to slowing food price inflation which has been affecting all supermarket groups.
“Our underlying sales performance in the period has been consistent with the good growth we experienced in the second quarter,” it said, adding it served an average 10.8 million customers a week during the third quarter, up by more than 1.6 million from two years ago.
Pennycook said there were signs consumers were reverting to more normal spending patterns after switching to cheaper products earlier in the year, though he said Morrison’s “value” range was still growing by a double-digit percentage compared with “single digit” gains for its premium range.
The group remained comfortable with analysts’ consensus annual profit forecast of about 785 million pounds, he added.
Morrison has been the fastest-growing of Britain’s four big supermarkets for most of the past two years, helped by its focus on low prices, innovative promotions and the popularity of its “Market Street” fresh food counters.
The latest figures from rivals mostly appear stronger, but they do not include the latest month of slowing inflation.
Asda, Britain’s second-biggest grocer, posted a 5.6 percent rise in underlying sales for the three months to Sept. 30, while J Sainsbury reported a 5.4 percent increase for the 16 weeks to Oct. 3 and Tesco a 3.1 percent rise for the three months to Aug. 29.
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