Euan Sutherland

Euan Sutherland has denied rumours of a clash with Steve Murrells

The Co-operative Group has categorically denied industry rumours suggesting it is on the lookout for a new head of retail.

Several sources inside and outside the society have told The Grocer The Co-op has instructed headhunters to conduct a confidential search to find a replacement for Steve Murrells.

They said Murrells, who was appointed head of food in July 2012 and became head of retail last summer having taken on responsibility for pharmacy, had clashed with new group CEO Euan Sutherland over Sutherland’s level of involvement in the day-to-day running of the food business.

Sutherland refuted the rumours and said the encouraging Christmas trading figures for The Co-op’s food business demonstrated that Murrells’ new strategy was starting to deliver.

“I think there may be someone out there who is disaffected, confused or trying to cause some trouble”

“I’m absolutely astounded [by these rumours]. They couldn’t be further from the truth. It’s ridiculous. I would have loved to have been more involved in the food business, but I’ve clearly been heavily involved in re-capitalising the bank and making sure the group was on safe foundations. And Steve is doing a really fantastic job with the food business. We’ve just had a great Christmas. His strategy is coming through.

“I think there may be someone out there who is disaffected, confused or trying to cause some trouble.

“It’s a bit concerning, but I’m used to that from the last nine months or so trying to save the bank.

“Steve is a fantastic guy. All the execs get on really well together. It’s been like one of those extreme team-building events over the past nine months,” he added.

Having been pre-occupied with the problems of The Co-operative Bank, Sutherland said the food team actually wanted him to spend more time on retail.

“The food team have been desperate for me to be more involved and to look at new products, new own-label ranges and new stores.”

Sutherland added he was “very content” with the sales and profit performance of the food business in recent weeks, but acknowledged there was more work to do. “We’re barely into the store refit programme, barely into the upgrade of the own-label ranges, and barely into the colleague initiatives so we’ve got a lot of what is giving us early promise in the sales line and that will come through further in 2015,” he said.

Pennycook role

Sutherland also revealed that Richard Pennycook, who was appointed on an interim basis as group finance director from Morrisons , had moved into a full-time role.

“Richard is an absolutely terrific addition to the team. It has been a very stressful, trying time we all went through trying to save the bank. We did that successfully and without as much burden on the group as we had once feared. Richard was a very large part of that.”

“I’m delighted with the fact we’ve got a fantastic opportunity at The Co-op. It’s a bit of a sleeping giant”

Sutherland took over from Peter Marks as CEO of The Co-op in April last year. The troubles with the bank and subsequent sale of a controlling stake to US hedge funds Aurelius and Silverpoint mean he now oversees a smaller society.

“I’m delighted with the fact we’ve got a fantastic opportunity at The Co-op. It’s a bit of a sleeping giant. In terms of clarity of purpose, the sales growth we can drive and the cost effectiveness we can deliver from being more streamlined, there is a huge amount to play for,” he said.

“We have a broad portfolio of businesses. It is simpler without the bank, but we still have 30% of the bank. My focus now is the lead up to May when we are committed to a re-launch of the group. I’m very excited about what that will give the group and every community throughout the UK. It’s a huge task, it’s great fun and we’ve got a great team to deliver it.”