GREGGS has begun the search for a new chief executive after Scots-born “pasty tax” opponent Ken McMeikan surprised the market by quitting the bakery chain.
McMeikan, who is leaving to become group chief executive at catering wholesaler Brakes, said he was “enormously proud” to have steered Greggs over the past four years, but analysts described his departure as a blow to the group. Shares fell almost 3 per cent to close at 472.5p.
The Falklands war veteran, who will stay in his role and remain on the board until his successor is appointed, said: “It has been a great honour to lead Greggs since 2008. It is a wonderful company with fantastic people and I am enormously proud of all that we have achieved together.”
One of the defining moments in McMeikan’s career came in May when Chancellor George Osborne scrapped plans for 20 per cent VAT on hot pasties and sausage rolls. Greggs had been a vocal opponent of the so-called pasty tax, which it argued would hit poor people hardest, and 300,000 customers signed a petition against the levy.
Shore Capital downgraded the baker’s shares to “hold” from “buy” until details emerge about who will replace McMeikan, who was paid £664,000 in salary and bonuses last year.
Analyst Clive Black said the former Royal Navy electronic warfare operator, who spent 14 years at Tesco – including a spell as chief executive of its Japanese arm – before joining rival Sainsbury’s in 2005, had been the “architect of a material modernisation” at Greggs, having overseen the development of a more efficient supply chain and the creation of a “fit for purpose” retail estate spanning 1,600 outlets.
He added: “We cannot hide our disappointment for Greggs’ shareholders on the announcement of McMeikan’s resignation.”
Chairman Derek Netherton said: “We are very grateful to Ken for the valuable contribution he has made to Greggs. He has led the company through the major changes that have put us in a strong position for the future with a clear strategy for growth in a difficult environment. We wish Ken well in his new role.”
Espirito Santo analyst Sanjay Vidyarthi said the timing of McMeikan’s departure was “unhelpful”, as Greggs saw its like-for-like sales fall 2.6 per cent during the third quarter and “will have its work cut out to meet market expectations” when it updates investors next month on its trading performance during the key festive season.
Vidyarthi is forecasting a pre-tax profit of £51.5 million for the current year, down from £53.1m in 2011, and said: “This is a well-run company with a strong balance sheet, but facing some important strategic decisions.”
Brakes is one of Europe’s largest catering suppliers, turning over more than £2.6 billion a year, compared with about £700m at Greggs. The group was bought by US private equity outfit Bain Capital for an estimated £1.4bn in 2007. A spokesman said its current boss, Philip Jansen, is set to stay on as chairman and become chief executive of payment processing firm WorldPay.
WorldPay was formerly owned by Royal Bank of Scotland but bank sold an 80 per cent stake in the business to Bain and fellow private equity group Advent International for £1.7bn two years ago.