Two key shareholder groups - the National Association of Pension Funds and the Association of British Insurers (ABI) are applying increasing pressure on Morrison’s position.
The profit warning revealed that the increased costs associated with converting Safeway stores to the Morrisons format would cause “operating margins to run significantly short of last year’s level for much of 2005.”
The temporary dual running costs of distribution, administration and IT functions associated with the conversion were also affecting performance, the statement said.
The ABI issued a “red top” warning on Morrisons following the statement’s release relating to “serious concerns about corporate governance standards in the company”.
The National Association of Pension Funds urged Morrisons shareholders to vote against re-electing Morrison as chairman at the company’s annual meeting next week.