Woolworths is searching for a new chief executive in an attempt to bring back the “wonder” of its glory days on the high street after making Trevor Bish-Jones arguably the most relieved man in retail - and telling him it was time to go.

After six years spent battling in vain to resurrect one of the oldest names in retail, Mr Bish-Jones will leave in three months' time with an estimated payoff of £800,000 and a potential £110,000 payout from a retention bonus agreed in 2005.

Richard North, the chairman, said: “There comes a point where it's a good thing to bring someone new in who has fresh ideas, fresh enthusiasm for the business. If you talk to Trevor, he'd say the same thing. We thought it was the right time to make the change. Because the timing is coming from the company, we have a responsibility to Trevor. He has a one-year contract and we will honour it in full.”

The announcement came as a trading statement showed the extent of the task facing a successor. Woolworths said that while its “price drop” campaign had been a success in attracting more customers, profit margins were being affected by the price cuts.

The group also said that it had sold four stores in Central London to Waitrose, the John Lewis-owned supermarket chain, for £25.5million.

The profit on the deal is likely to dwarf the amount of money made across Woolworths' 817 stores this year. Like-for-like sales fell 2.2 per cent in the 19 weeks to June 14.

Shares in the business, famed for its “Wonder of Woolies” advertisements a quarter of a century ago, fell more than 5 per cent to 9.27p. The cheapest product in Woolworths, a mini pack of Haribo Starmix, is worth more, at 10p.

Philip Dorgan, a Panmure Gordon analyst, said: “Poorish sales, margin pressures and the departure of a chief executive do not a good announcement make.”

Mr North insisted that he would have no problem filling the vacancy, despite retail executives claiming that Mr Bish-Jones has long held the toughest job on the high street. One said he was glad that Mr Bish-Jones had managed to “escape”.

Mr North countered: “This is one of the most-loved retail names in this country. It's extraordinary just how many people talk fondly about Woolworths. Woolworths has to be true to its original roots - a value retailer, where you went in there and bought stuff that was cheap and did the job. If we've got good stuff and sexy prices, people are going to buy more.”

Mr Bish-Jones, who met shareholders at Woolworths' annual meeting yesterday but refused to comment on the announcement, is thought to have been looking for a new job for the past two years, given a widely held belief in the City that Woolworths will be broken up. While the stores are barely profitable, the group also owns a lucrative wholesale business, EUK, which supplies books, CDs and DVDs to other retailers and supermarkets. Woolworths also benefits from its 2 entertain publishing joint venture with the BBC.

John Stevenson, retail analyst for Shore Capital, said: “The news that Trevor Bish-Jones is leaving the group is not a surprise, but it's certainly not a positive development, either.”

Shareholders at the annual meeting appeared to be equally concerned about the loss of the executive - one called him a “great asset” - and the size of his payoff. Few were moved to register any criticism as Mr North made his way through the meeting's resolutions. One observed: “With a dividend of 0.6p, I don't really see the point in voting either way, do you?”

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