Morrison Supermarkets @ 263p, -1.8p (-0.63%).
So the "Penny" has dropped in more ways than one.
As discussed last post (Expecting the unexpected...) the unexpected announcement that Morrison's FD, Richard Pennycook, will step down next year is leading to speculation as to his reasons which range from:
- a possibly constrained ambition that Morrison's can't help him to achieve after losing out to Dalton Philips for the CEO role.
- a hidden message that the catch up strategy in place might take time to deliver growth over the next couple of years.
It also seems that his desire to stay into next year could be linked to a 2 year golden hand cuffs deal following his losing out on the CEO role.
Behind the widespread disappointment, is the view that his steadying influence and technical capability was a significant asset to the company particularly given the fact that his tenure spanned the final days of the Ken Morrison era and that much of the company's achievement in finally absorbing Safeway's is down to him.
It seems to be speculation playing on fears at this juncture but it doesn't help my own doubts about the company's strategic direction to see the term "crazier ideas" in the same sentence as Dalton Philips (http://www.telegraph.co.uk: Morrisons finance director to quit, shares fall).
But I wouldn't expect the company to suddenly deliver a disastrous set of financial results so am not concerned about the FD role from that perspective.
They will surely seek someone capable.
Its also suggested that his 2 year golden handcuff agreement is conditional on the company's earnings per share matching inflation which adds support.
But this might also explain the questionable share buyback program which I am not particularly enamoured with (Morrison's Preliminary Results: "Different and Better than Ever"?), as the FD must surely be the most influential decision maker for this piece of the strategy.
On a technicality, the same profit figure divided across less shares in issue would result in a higher eps figure.
Putting my own doubts to one side though, it has to be said that like a spinning coin that has just come down on the wrong side the doubters seem to be queuing up now as opposed to when they announced the strategy, along with expectation beating preliminary results, to a positive reception (Morrison's Preliminary Results: "Different and Better than Ever"?).
But now following disappointment in the most recent trading update where the company reported its first like for like sales decline since 2005 analysts are less positive (http://www.sharecast.com: Market tastes the difference at Sainsbury').
Fickle markets or fragile confidence perhaps but this latest news is adding speculation to fuel doubts and fears.
Related article links:
- http://www.telegraph.co.uk: Morrisons finance director to quit, shares fall
- http://www.citywire.co.uk: Shore Capital says 'sell' Morrisons as finance director steps down
- http://www.sharecast.com: Tuesday tips round-up: Morrisons, Kier, Segro
- http://www.sharecast.com: Market tastes the difference at Sainsbury'
Related posts:
- Expecting the unexpected as Morrisons FD announces intention to step down.
- Weekend rumours: Morrisons to raid Iceland!
- Morrison's Preliminary Results: "Different and Better than Ever"?
- Supermarket Sweep: Tesco; Morrisons; or Sainsburys?
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