Reuters/London


Morrisons has named former Tesco executive David Potts as its new chief executive, completing the recruitment of a triumvirate of ex-Tesco men to restore growth at Britain’s fourth-biggest supermarket chain.
The 57-year-old now faces the task of boosting results that have lagged behind market leader Tesco, Wal-Mart’s Asda and Sainsbury’s under the five-year watch of predecessor Dalton Philips, who was ousted in January after another plunge in Christmas sales.
Potts, who had been the bookmakers’ favourite for the job, is a 40-year veteran of the grocery industry and a former Tesco colleague of new Morrisons chairman Andrew Higginson and finance chief Trevor Strain.
All served Tesco during the time when Terry Leahy was CEO and the company rose to dominance, though some argue that the Leahy era was also the time when the seeds of Tesco’s recent problems were sown.
Shares in Morrisons, down 20% over the past year, rose as much as 2.3% on yesterday’s confirmation of Potts’ appointment. By 1228 GMT the shares had settled a little at about 194 pence, up 1%.
“We believe he will bring focus and pace to Morrisons ... We view the current strategy as being correct, but the execution in particular needs correction,” Shore Capital analyst Clive Black said.
Having started his career stacking shelves in his local Tesco store, Potts rose to head the company’s supply chain, its UK business and then its Asian operations. After leaving in 2011, not long after Philip Clarke became CEO, he acted as a retail expert for several international advisory and private equity businesses.
“David is the best retailer I have worked with in 25 years in the industry,” said Higginson. “Having worked alongside him for 15 years, I know he will bring to Morrisons a focus on the customer, a track record of delivery, flair, talent and immense energy to his new role.”
Those qualities will be needed as Morrisons, in common with its biggest rivals, grapples with the rise of discounters Aldi and Lidl and engages in an intensifying price war.
Morrisons has been hit particularly hard because the discounters are strong in its northern heartlands and it was late to move into better-performing parts of the market, namely convenience stores and online shopping.
Ken Morrison, the son of the retailer’s founder and the boss of the supermarket for nearly half a century before stepping down in 2008, welcomed Potts’ appointment. Morrison had been a fierce critic of Philips, humiliating him with a critique of his strategy at last year’s annual shareholder meeting.
“It sounds very promising. He seems to be a well experienced individual and he’s achieved quite a lot in his career,” Morrison told Reuters, adding that he wants Potts to focus on reviving Morrisons’ core supermarkets.
The Morrison family holds almost 10% of the company.
Higginson said in January that Morrisons’ strategy was “well cast”, indicating that it is unlikely to change dramatically under a new CEO.
After a failed shift upmarket, Philips changed tack last March with a massive profit warning and announcement of plans to cut prices to take on the discounters.
Some analysts say this, coupled with a focus on fresh produce supplied by its own farms and abattoirs, could drive a recovery. Industry data published on Feb. 10 showed the company’s best performance since December 2013, with sales down 0.4% over the 12 weeks to February 1.
Potts, who starts his new role on March 16, will be paid an annual salary of £850,000 ($1.32mn) and will also be eligible for long-term and short-term incentive schemes.

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