Turning a profit with Morrisons' FD Richard Pennycook
Turnaround specialist and Morrisons' FD Richard Pennycook
By Tamsin Brown | CFO UK | Published 16:58, 03 May 11
He is highly regarded as a turn-around specialist and is arguably the architect of Morrisons’ recovery. Richard Pennycook, group finance director of the UK’s third largest supermarket, has been FD at household names Laura Ashley, RAC, JD Wetherspoon and Welcome Break, so you might imagine that this softly spoken accountant had been planning his career in finance since he could spell ‘double-entry bookkeeping’. Apparently not.
“Of course I didn’t want to be a finance director – I wanted to be a fighter pilot. When my eyes were completely shot at the age of 12 I thought: what’s the next most exciting thing you could imagine, and it just had to be a finance director, didn’t it?” the 47-year-old says wryly.
Pennycook pursued his alternative career choice with determination, reading economics and accounting at university, spending five years at Arthur Andersen and then following his boss to the department store group Allders after a management buyout.
Over the next 20 years Pennycook successfully managed five turnarounds, including his most recent and arguably toughest test at Morrisons. In fact, Allders, his first, was the only one he didn’t choose to do.
“Most turnaround people say that the first one happens to you, you don’t choose to do it and that was what happened at Allders,” Pennycook says.
The Allders MBO coincided with the start of the recession in the early 1990s. “We had expected to refinance the business within 12 months to do a sale and leaseback of department stores and pay down debt. In fact the property market fell apart, there was no way this financing was going to take place and as a result we had to go into a complete renegotiation with the banks,” he explains.
This was a painfully protracted process because Allders had 23 banks and 25 equity players to negotiate with. “Sorting that out – it took 18 months – was just fantastic experience. I learnt so much in that 18 months and made contacts that I have still got.”
This experience and the bulging contacts book it brought with it set him up for the string of turnarounds he took on, culminating in the high-profile recovery of Morrisons where he was parachuted in in 2005.
Following Morrisons’ acquisition of rival Safeway, the group’s finances were in a mess and one of Pennycook’s first tasks was to negotiate a waiver on its banking covenants. But that was just the beginning.
Sir Ken Morrison, the chain’s founder, had earned himself a reputation as one of the best shopkeepers in the world having built up the business brick-by-brick and produced 37 years of consecutive growth. But his team clearly wasn’t up to the challenge of buying and integrating something twice the size of Morrisons.
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