Sainsbury’s former finance director Darren Shapland’s departure from a critical commercial role created for him after less than a year has surprised many who presumed he was being groomed to succeed chief executive Justin King.
Shapland was made group development director last July as the group decided to pursue a global growth strategy that put China at its heart. Shapland moved into the role after a decade as group chief financial officer.
He will formally step down on 13 July at its annual general meeting and his portfolio, comprising group responsibility for its convenience and property arms, strategy and new business development, as well as responsibility for overseeing Sainsbury’s Bank, will be split between King and Shapland’s successor. Chief financial officer John Rogers assumes the property line.
Shapland will, however, remain a non-executive chairman of Sainsbury’s Bank which will see him work one day every week. He has been a non-executive director of Ladbrokes since 2009.
The departure comes after suggestions of ongoing health problems Shapland allegedly suffered in the past year, and a personal bereavement. The creation of the role into which Shapland moved was seen by many at the time as a tactic by Sainsbury’s to stop him from defecting to Marks & Spencer, when incumbent FD Ian Dyson left. “[This is] a very considerable body blow to Sainsbury’s because he was one of the shining lights,” Clive Black, analyst at Shore Capital, told Supermarket & Retailer magazine – later commenting in the Financial Times that “he was the man to take Sainsbury’s to the next generation”.
Sainsbury’s chairman David Tyler admitted the news was regrettable. “Of course we are disappointed,” the Daily Mail reported him saying. “He wanted a change of life; we absolutely didn’t want this to happen. He made his decision after a lot of mulling.” The Financial Times suggested Shapland’s desire to become a chief executive “had cooled” of late.
Shapland said he has left the business in “great shape”. But it faces a number of pressures, not least shrinking consumer spending.
Citing comments from MF Global analyst Andy Smith, Just-Food.com suggested that Shapland’s departure was connected to “restrictions in funding and scope of any international expansion”, while the UK grocery market struggles with negative like-for-like sales volumes, the all-important metric by which the sector judges performance.
The grocery market website said that analysts thought customer loyalty at Sainsbury’s is “more fragile” than was previously thought and pointed out that in having the lowest operating margin among the UK-listed food retailers, its earnings are “more sensitive” to margin movements.
There has been something of a trend at Sainsbury’s that has seen it choose former FDs as its chief executive. David Tyler came to Sainsbury’s from nine years in the FD role at GUS, which once owned Argos, Burberry and Experian, succeeding Sir Philip Hampton who himself had previously served as FD at British Steel and British Telecom, among others. Shapland was FD of Carpetright and Superdrug prior to joining Sainsbury’s, and was just 38 when he moved into the FTSE-100.