Moreover, the company remains unable to fully map out its path to future profitability and therefore we see few causes for encouragement."Underlying sales at the core Morrisons estate fell 5.1 per cent excluding fuel during the past 12 weeks - the worst performance in the industry. Philip Dorgan, at Panmure Gordon, said the statement was "in effect another profits warning, with much of the usual bullishness squeezed out of the statement by the deterioration in current trade".The retail team at Citigroup wrote: "While the conversions appear to be trading reasonably, the core Morrisons estate is struggling. In the next year we will have an absolutely sold profit base on which to build."Analysts were less convinced. It took another clash with his deputy chairman, David Jones, for Sir Ken to announce that the group was looking for someone to replace Bob Stott as chief executive.Sir Ken said he would rather conduct the search himself than employ a headhunter, adding: "We would look at people we are familiar with." He said he was "overseeing" the process to name his own successor, and that it was "hard to tell" whether Paul Manduca, the company's most recent non-executive recruit, was a shoo-in for the post.Mr Stott said the group was disappointed by its poor performance but remained characteristically upbeat, adding: "In two years' time we firmly believe we will give stakeholders solid earnings growth that can be relied upon year after year.
Its operating margin before the exceptional costs sunk to 0.9 per cent from 3 per cent a year ago.Sir Ken Morrison, the founder and chairman who celebrated his 74th birthday yesterday, said he intended to "stay around for another two to three years" to see out the company's attempt to salvage its £3bn takeover of Safeway. The group failed to explain a collapse in profits that will see it fall into the red this year for the first time in its 106-year history. Five months after admitting it had no handle on its finances, Morrisons said underlying pre-tax profits would be at the lower end of its estimated £50m to £150m range. It also said it would be six months before it could reveal how it intended to tackle its spiralling cost base.An exceptional charge of £119m meant it reported an interim loss before tax of £73.7m for the 25 weeks to 24 July, against a £121.6m profit the previous year. Wm Morrison dashed hopes that its profits would recover this year as it unveiled poor trading figures yesterday and launched its search for a new chief executive. But Tube Lines will argue that Alstom, which is responsible for maintaining the trains, should take its share of responsibility, as should the unions for backing their drivers' refusal to work and London Underground for acquiescing in their action.Lawyers are expected to argue for months over which organisation should take the blame.
Sources in the industry said the complex public private partnership in control of the Tube system was to blame for the expected clash over who pays for the cost of the disruption.Terry Morgan, the chief executive of Tube Lines, told the London Assembly's transport committee yesterday the contract for maintaining Northern line trains, which was awarded 10 years ago, was "flawed".Mr Morgan said 60 per cent of failures on the line were down to the state of the train fleet and revealed the emergency trip cock at the centre of last week's problems was installed 12 years ago as a temporary measure.Roger Evans, the committee chairman, said the Northern Line incident had been a "sad state of affairs".. The cost of the closure of the line last week has been put at £10m, which includes lost revenue, compensation, staff time and business losses because of workers arriving late.London Underground is expected to argue that Tube Lines, owned by Amey and Bechtel, is responsible for the problem because it is in overall charge of maintenance and the infrastructure. The recent shutdown of one of London's busiest Tube routes has sparked a legal battle over who should pay millions of pounds in compensation. The argument is between lawyers working for the state-owned London Underground, which runs the trains, the consortium Tube Lines, which is responsible for the infrastructure, and the French-owned sub-contractor Alstom. Drivers refused to operate trains on the Northern line because of problems with the emergency braking system. They understood our arithmetic, and why we had to use it, but clearly if that public statement is right, that's not what they intended.".
