Warehouse chair backs Morrice - but tips retirement

Ian Morrice, chief executive of The Warehouse. Photo / Natalie Slade.

The board of The Warehouse, New Zealand's biggest retailer, has come out and publicly backed its chief executive, but revealed that he wants to leave the company this year.

Reports of disquiet around Ian Morrice, chief executive of the company since 2004, began circulating last week, with the recent 2.7 per cent decline in sales in the two months ended January 2 to blame.

The softer earnings have forced the company to cut its forecast first-half profit to a range of between $51 million to $54 million in the six-months ended January 30, compared to the $57 million reported in the same period a year ago.

Chairman Kevin Smith has issued a statement on behalf of the board, saying directors were comfortable with Morrice's performance. In it he reveals that Morrice last year talked with the board about "retiring from the company in 2011."

"In response to speculation about the tenure of Ian Morrice, reported in media in recent days, the Board confirms that it continues to support Mr Morrice as CEO. The Board is comfortable with Ian's performance and has not met to discuss this with reference to recent trading results," says the release.

"Whilst the company is disappointed in the December/ New Year trading results that were outlined to the market in our 5 January 2011 announcement, these results must be assessed in the context of the very difficult trading conditions for retailers generally over the period."

The announcement refers to the Statistics NZ electronic card data released last week which showed a 1.6 per cent fall in core retail sales.

"During 2010, Ian Morrice has discussed with the Board his own desire to retire from the company in 2011, but no decision has been made regarding this yet. Ian jointed the company in 2004 on a three-year agreement and will by then have led the business for more than six years."

"The Warehouse, as a matter of good governance and strategy, addresses succession planning as part of normal business. This has been one of Ian Morrice's objectives which is discussed with myself as the Chair regularly. An announcement on succession in the CEO role will be made in due course, as and when the matter is determined."

Shares rose 1.1% to $3.60 today, and have declined 11.9% in the past 12-months.

The stock has lagged behind the performance of the benchmark NZX 50 Index since June 2008, and is rated as "hold" based on a consensus survey of nine analysts compiled by Reuters.

In 2003, Greg Muir resigned as chief executive over differences with the board about the company's direction.

Founder Stephen Tindall owns 26.69 percent of the company and the Tindall Foundation owns 21.31 percent, according to the company's annual report.

- HERALD ONLINE WITH NZPA/BUSINESSDESK