Compass chairman on the way out

STRUGGLING food group Compass confirmed this morning that its chairman Sir Francis Mackay is to step down ahead of the company's annual meeting next February. The catering giant is the company behind the notorious Scolarest school dinners, featured in Jamie Oliver's School Dinners series.

Mackay's departure is seen as a sop to the City, which was angered by the handling of two profit warnings over the winter. The company denies this, insisting that Mackay had indicated several months ago that he wanted to move on.

City analysts will see the move somewhat differently, however. Compass Group owned up to a host of trading problems in September and saw its shares slump in value. It said at the time that it was past the worst of its problems but a second shock warning came in March, this one blamed on falling profits on a contract to provide food to British troops serving in Iraq.

Then Compass was hit by criticism of its subsidiary Scolarest, when Jamie Oliver's School Dinners series was broadcast earlier this year. The celebrity chef united the nation in condemnation of its unhealthy school meals such as turkey twizzlers.

The company hired head hunters earlier this year and had been planning to make an announcement about this later this month when it publishes half-year results. News leaked that recruitment consultants were on the job leaked, however, prompting today's confirmation that the hunt for a new chairman is on.

Mackay joined Compass in 1986 and has been a key figure in the company's development, particularly in his role in helping the company make a number of key acquisitions. He became chief executive in 1991.

Mackay is also chairman of Kingfisher, which owns B&Q, and was revealed yesterday as being in early-stage merger discussions with Home Depot, the world's biggest DIY retailer.

The possible tie-up with Home Depot was discussed at a meeting in London between Mackay, Kingfisher chief executive Gerry Murphy, and Bob Nardelli, Home Depot chairman and chief executive. Any deal between the two groups would require Kingfisher to dispose of Castorama, the French FIY chain it took over in 2002.