Morrisons chairman denies he is building a 'mini Tesco'

Andy Higginson outlines plan for Morrisons after naming David Potts as the new chief executive

Morrisons chairman denies he is building a 'mini Tesco'
Morrisons chairman Andy Higginson Credit: Photo: Alan Peebles

Andy Higginson, the chairman of Wm Morrison, has insisted he is not trying to build a “mini Tesco” after hiring former Tesco colleague David Potts as the new chief executive of the Bradford-based grocer.

Morrisons confirmed in a stock market statement on Wednesday that Mr Potts would replace Dalton Philips as chief executive.

Mr Higginson, who joined Morrisons last year, worked with Mr Potts at Tesco for 14 years. Trevor Strain, Morrisons finance director, is also a former Tesco executive.

The Morrisons chairman said Mr Potts was the “best retailer I have worked with”, adding: “It reduces the risk [of hiring a new chief executive]quite a lot. I knew what he could do over 14 years.”

However, he insisted that Morrisons had run a “genuinely open process” to find a new chief executive and had shortlisted four candidates.

New Morrisons CEO David Potts

“The difference between the winners and losers is execution,” Mr Higginson said of the supermarket industry. “The success of Morrisons will depend on Morrisons being Morrisons, not being Tesco.”

The Morrisons chairman said that he and Mr Potts had “grown up admiring Morrisons” and the “principles” with which it was run by former boss Sir Ken Morrison, such as a focus on fresh food.

The City welcomed the appointment of Mr Potts, who will join Morrisons on March 16, with shares in the company up 1.10, or 0.6pc, to 192.90p.

Mr Potts started his Tesco career aged 16 as a shelf stacker before rising to become head of its Asian business.

The new Morrisons boss, who is now 57, could reconsider the supermarket’s £216m tie-up with Ocado. City analysts said that Mr Potts is likely to analyse the tie-up with Ocado and added that they would be “surprised if this model was deemed to be the way forward”.

Morrisons and Ocado agreed a deal in 2013 to launch a Morrisons.com online grocery service. The agreement was struck by Mr Philips – who was ousted as Morrisons boss in January – and runs for 25 years.

However, analysts have questioned how profitable the tie-up will be for Morrisons and why the retailer was not using its own supermarkets to help fulfil grocery orders. Instead, Morrisons food is delivered to Ocado’s warehouses before being shipped to shoppers.

Clive Black, an analyst at Shore Capital, said: “While the superstore estate is expected to be the prime focus of Mr Potts’ attention in the immediate future, we will also naturally watch with interest to see what Messrs Higginson and Potts do with respect to its e-commerce model and the 25-year no-break-clause contract with Ocado.

“To our minds we would be surprised if this model was deemed to be the way forward.”

The bosses of Ocado have insisted that the deal is safe. Speaking in January, Duncan Tatton-Brown, the finance director of Ocado, said the deal was secure even if the new boss tried to pull out. He said: “It’s not something we would necessarily expect and we’re protected by the contract anyway.”

Mr Higginson said Morrisons online business was not a priority. He said: “Any new CEO will look at everything. With Ocado, it is a relatively new deal and they are doing a good job in terms of customer satisfaction.

“But success over the next three to five years will be due to the core supermarkets.”

Nonetheless, he gave the Ocado deal some backing by describing it as “exciting”, “one for the future”, and “one of the better” deals done by Morrisons under Mr Philips.

Last month Morrisons revealed the worst sales of any of the major supermarkets over the crucial Christmas trading period for the second year running. Like-for-like sales excluding fuel dropped 3.1pc.

Ocado van