Heat on Morrisons CEO as ex-Tesco man named next chairman

LONDON, United Kingdom - Morrisons named Tesco veteran Andrew Higginson as its next chairman on Tuesday, turning up the heat on Chief Executive Dalton Philips as he tries to combat the supermarket's loss of market share.

Higginson, who spent 15 years as an executive director at rival Tesco, will replace Morrisons Chairman Ian Gibson when he retires in 2015. Higginson will join the Morrisons board on Oct. 1 as non-executive deputy chairman and chairman elect.

"Philips can sleep easy for a couple more months, but after that the pressure will be on and it will be interesting to see how long he lasts," said independent retail analyst Nick Bubb.

Britain's fourth-largest supermarket chain Morrisons is on a par with Tesco as the worst-performing of Britain's so-called big four grocers, trailing Wal-Mart's Asda and Sainsbury's.

Industry data published on Tuesday showed Morrisons' sales fell 3.8 percent year-on-year in the 12 weeks to July 20 - the same percentage decline as Tesco - while Morrisons' market share dropped to 11 percent from 11.5 percent.

The company issued a huge profit warning in March and its shares have lost a third of their value this year.

Last month at Morrisons' annual shareholders' meeting Philips' strategy was criticised by Ken Morrison, the son of the grocer's founder and a former boss of the firm.

Morrison, 82, who ran Morrisons for half a century before stepping down in 2008, said the grocer's performance was "disastrous" and called for its board to be bolstered with "retail knowledge".

On Tuesday, he welcomed Higginson's appointment.

"I think it sounds very good ... He's got good background, good experience," he told Reuters.

"Wealth of experience"

Speaking while on holiday in Jersey, Morrison declined to give a view on whether Higginson should stick with Philips.

"I'm looking at the results more than anything, that's the key as far as I'm concerned," he said.

Ken Morrison's wider family owns about 10 percent of Morrisons' equity.

Higginson, who left Tesco in 2012, was most recently the chairman of discount store Poundland, the chairman of clothing retailer N Brown and senior independent director of BSkyB. He said on Tuesday he would step down from Poundland.

"Higginson brings a wealth of experience and talent to what it has to be said has been a troubled group in Morrisons," said Shore Capital analyst Clive Black.

Philips has been cutting prices to try and stem a loss of market share to discounters Aldi and Lidl in a food market growing at its slowest rate for a decade.

He is spending 1 billion pounds ($1.7 billion) on price cuts over three years, aiming to close the price gap with discounters so customers will recognise Morrisons' points of difference, such as its supply chain. Morrisons is unique among British grocers in making 60 percent of the fresh food it sells.

Morrisons shares were up 2 pence, or 1.16 pcercent, at 174.3 pence at 1216 GMT, outperforming the FTSE index of 100 leading shares which was 0.61 percent higher.

$1 = 0.5900 British Pounds