While he is one of the most affable Footsie chief executives around, the enforced departure is not unexpected, given the length of his tenure and the glacial progress made in rebuilding Morrisons as a food retailing force.
Tesco only gave Philips’s counterpart, Phil Clarke, a little more than three years before ousting him last summer. And – as was argued here yesterday – the latest major retail management upheaval will surely make another would-be corporate turnaround artist, Marc Bolland at Marks & Spencer, a tad nervous. Bolland comes up to the “big five” anniversary of his stewardship of M&S this summer.
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The truth is that institutional investors tend to cut bosses a fair amount of slack when they are trying to reshape a company and embed a new strategic vision. That often translates unofficially as 18 months’ to two years’ grace.
But shareholders get nervous – even sceptical – if tangible fruits of the chief executive’s strategy are not apparent after three years or so, and five years seems like an eternity of jam tomorrow disappointment.
Hence, Philips has been ousted by incoming Morrisons chairman Andy Higginson, the former Tesco veteran, who has shown no squeamishness about wielding the knife. It looks a case of “sorry you have to leave, here’s your coat”.
However, in many ways Philips had only himself to blame. While accurately bemoaning what he called the worst supermarket trading environment for a generation, a mixture of consumer cautiousness and the rise of cut-price discounters including Aldi and Lidl, Philips only introduced the two growth sectors of the industry – online shopping and convenience stores – to Morrisons more than three years into the job.
That increasingly looked not so much a new broom as a broken vacuum cleaner. Thousands of jobs went, £1 billion of price cuts were ushered in at Morrisons over three years – but still, right up to yesterday’s Christmas trading update showing a further 3 per cent fall in underlying sales, there was no sign of a turnaround at the checkouts.
The irony is that although Philips simply ran out of time and the City’s patience, he may have set the groundwork on price cuts, overhead reduction and online and convenience store growth that could make things easier for his successor. In echoes of Napoleon’s dictum, he was not a lucky general, but perhaps also not the most assured one.
Oil price slide paves the way for household relief
INFLATION in December dropped to a jaw-dropping 0.5 per cent, as the slump in oil prices and food price deflation fed through to household budgets.
Treasury chief secretary Danny Alexander welcomed the fall from 1 per cent inflation in November – itself well adrift of the Bank of England’s 2 per cent mid-term target – as “like a giant tax cut for the economy”. Always useful in an election year.
Bank of England governor Mark Carney will be unworried about the statutory letter he now has to send to Chancellor George Osborne explaining why price growth is more than 1 per cent off that mid-term target.
The Bank’s excuse is not of the-dog-ate-my-homework sort; it is readily explicable. The fears of embedded deflation in the economy rather than a more likely occasional flirtation with that dangerous economic phenomenon still looks premature, too.
It will also keep sterling on the ropes in the currency markets, which won’t be bad news for Britain’s exporters, either.
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