John King is to quit as the chief executive of Matalan, the discount clothing retailer, at the end of the year to return to America. He will leave with a year’s salary worth about £420,000.
Mr King, whose wife-to-be is American, told the board of Matalan of his ambitions to go back to the United States, where he worked previously as chief operating officer of Delta US.
It is understood that the two parties agreed that Mr King, who only joined the board in March 2003, should stay on until the year-end while a replacement is sought and to ensure a smooth handover.
Headhunters at Spencer Stuart have been hired to find suitable candidates.
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It is believed the board expects Mr King’s replacement to come from outside the company, although possible internal contenders include the current finance director, Phil Dutton.
Richard Ratner at Seymour Pierce said of Mr King: “While we do not perceive him as a ‘strategy man’, he is a solid ‘seat-of-the-pants’ operator and has done some excellent work at the company. His departure must be viewed as a negative and perhaps is an indication of where he thinks Matalan is going.”
John Hargreaves, Matalan’s chairman, said he was pleased Mr King had agreed to stay on until the end of the year. “John has led Matalan through a difficult period and has done much to position the business to face the challenges ahead,” Mr Hargreaves said today.
However, Mr King has decided to go during a particularly turbulent time for Britain’s retailers and amid trading conditions on the high street that the retailer has consistently described as difficult.
It is understood that the uncertainty surrounding high street retailing - which has been hard hit by the decline in consumer confidence - prompted the board to lobby Mr King to stay for a full year.
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Last week Matalan reported a 5.5 per cent decline in like-for-like sales for the 10 weeks to January 7, amid a 2.5 per cent fall in clothing sales including ‘grey market’ promotional items.
At the time Mr King said: “In a tough trading environment we have maintained market share in our core clothing business, which represents 80 per cent of sales. We will continue to focus on strengthening gross margins and cashflows.”
For the six months to the end of last August, pre-tax profits at Matalan fell to £28.7 million, from £41.6 million over the same period last year. Turnover fell slightly to £527.8 million.
Analysts forecast profits for 2006 at Matalan to come in at about £60 million before tax.
The shares closed last night at 170p, valuing the retailer at just under £700 million.
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