Morrison's investors bay for blood

FIVE profit warnings could prove too many for William Morrison chief executive Bob Stott, who is this weekend digesting hostile City reaction to the company's latest outlook statement.

Reports today say that the company has appointed headhunters to find a replacement to run the stores group following growing shareholder unease at the group's dire financial performance and a 22% slump in the share price since Morrison took over Safeway.

Morrisons investors are angry at how the botched way in which the group has handled its £3bn acquisition of Safeway and speculation is mounting that the supermarket retailer could itself now become vulnerable to a takeover bid.

Morrisons declined to comment on the rumours this weekend which come just after a fifth profits warning last week. That announcement was made after pressure from the Financial Services Authority on the company following an admission by Morrisons that it couldn't give precise financial guidance.

The supermarket retailer's latest prediction makes for dire reading. The company admitted that it now expects pre-tax profits this year to come in between £50-150m, compared with City forecasts of £250 ? that figure was itself less than half the £550m analysts had pencilled in earlier this year. After exceptional items Morrison's performance could look even worse, with a headline loss of at least £200m.

Analysts expressed anger at the company's inability to provide precise financial guidance and that dissatisfaction is believed to have fuelled calls for Stott to step aside. Recruitment company Hanson Green is already looking for four non-executive directors to join the Morrison board and is believed to be sounding out possible candidates to run the group.

A research note from Morgan Stanley on Friday said that a new chief executive focused on cutting costs at Morrison would be a major factor behind any recovery. Chairman Sir Ken Morrison, meanwhile, has lost a huge amount of respect in the City following the slump in performance in the wake of the Safeway takeover.

Rumours point to former Asda bosses Archie Norman and Allan Leighton as possible bidders for the business. Other retail players are unlikely to bid for the business as Competition Commission guidance indicates that a takeover would not be well received.