The former chairman of Morrisons has launched an extraordinary public tirade against the supermarket's leadership, describing the chief executive's strategy as "bullshit" and warning that the business founded by his father had been ruined.
Sir Ken Morrison, 82, tore into Morrisons boss Dalton Philips in a scathing intervention at the retailer's annual general meeting. After watching Philips outline his strategy to modernise the Bradford-based chain, Morrison told the chief executive: "When I left work and started working as a hobby, I chose to raise cattle. I have something like 1,000 bullocks and, having listened to your presentation, Dalton, you've got a lot more bullshit than me."
Dressed in his trademark striped company tie, Morrison's outburst drew loud applause from hundreds of independent shareholders in the meeting at the company's Bradford headquarters as he picked apart the record of Philips and his management colleagues. He said the supermarkets had been neglected in favour of ill-conceived ventures into babywear retailing, convenience stores and selling online.
"A really first-class business has been ruined by a lack of leadership from the top," said Morrison, who built his father's grocery shop into a national chain before stepping down in 2008. "The results have been described by the chairman and the chief executive as disappointing. I personally thought they were disastrous."
Over the past three months alone Morrisons has reported a 7.1% slump in sales – the biggest revenue drop at a listed supermarket in a generation. When Philips joined Morrisons in 2010 the business did not have a website or convenience stores, which are the industry's fastest-growing sales channels.
Morrison's comments came as shareholders registered a significant protest vote against the management team who have presided over a 27% fall in the FTSE 100 company's share price over the past year. According to initial voting returns, 14% of those voting voted against Philips's re-election, 10.7% registered a protest against the chairman, Sir Ian Gibson, and 26.5% against the remuneration policy.
Gibson announced at the AGM he would stand down next year. But he denied he had felt under pressure to do so, saying he decided to announce his departure to "clear up any speculation and uncertainty" and put an "orderly plan" in place.
In the packed meeting a chorus of former and current employee-shareholders, family members and small investors, some of whom had travelled a considerable distance to attend, criticised the company for a series of strategic missteps, particularly the purchase of baby goods retailer Kiddicare which cost it £163m in profit writedowns. Several shareholders called for the board to step down and for more attention to be given to standards in the big supermarkets which form the core of Morrisons' business.
Chris Blundell, Morrison's nephew and a former Morrisons director, added: "I think we're in a rescue situation here and it needs urgent action. Things need to be done very quickly. We are losing our reputation. A reputation is everything in business and I think you've lost that to a great extent."
Gibson said the business was suffering alongside many of its rivals amid dramatic changes in the way shoppers buy their groceries. But he said that over the past few years Morrisons had performed well against its peers, with improved profits, free cash flow and strong dividends.
"This company is not in a rescue situation. It's a very sound business that is in the process of still growing," he said.
He admitted that buying Kiddicare and particularly 10 large stores for its expansion was a mistake but said mistakes had been made in previous generations at the company.
In a remark clearly aimed at Sir Ken, he said: "We are still paying for some of those [mistakes]. To have to launch online 16 to 14 years after the competition, not knowing anything about IT as a consequence, is one of the problems."
Gibson's departure could increase the pressure on Philips, who was hired by him. The chairman has supported giving the chief executive a year to produce results that will impress an incoming chairman looking to drive change.
Philips, who admitted it was his toughest annual shareholder meeting in his four years in charge of the business, said: "There's a well documented difference on strategy between Sir Ken and myself. My job is to deliver on the strategy we have outlined to shareholders with their support."
While the founding family's comments could revive speculation that they are planning a bid for the company, Morrison appeared to pour cold water on the idea. He said: "I'm far too old to consider anything of that manner and other members of the family have got other interests."
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