Steve Johnson today joins Woolworths as chief executive – and if there is a worse job in British retailing, it is not obvious what it might be.

The business has been identified as one of a clutch on the high street that, even before the slowdown, had no real reason still to exist. Two weeks ago, on the announcement of Mr Johnson’s appointment, one respected City analyst said that he would have no choice but to rip up the group’s business model and become a nickel-and-dime store. Analysts believe that, in the current financial year, Woolworths could fall nearly £10 million into the red.

The company has rejected an undisclosed offer from Malcolm Walker, founder of the Iceland retail chain, and Baugur, the Icelandic investment group, for its 815 stores. It said that the highly conditional approach from Mr Walker was “unacceptable”. Richard North, the chairman, insisted that the group had the right strategy to turn the business around.

Investors were angry, having seen their shares plunge by more than 80 per cent since the start of last year to end on Friday at 7¼p.

Over the weekend, Ardeshir Naghshineh, the Iranian-born property tycoon who has amassed a 10 per cent stake in the retailer and who backed the rejection of the Walker-Baugur approach, was reported to be considering an offer.

The search for a replacement to Trevor Bish-Jones, who left in July after six years in the hot seat, was always going to be hard, but Mr Johnson is a retail veteran with experience in running ailing chains. He has been out of work for a year after selling Focus DIY to Cerberus, the private equity house, for £1. As part of the deal, he ensured that Cerberus paid off Focus’s £174 million debt and returned £40 million to bondholders.

A former Bain & Company management consultant, he spent seven years at Asda before he went to Focus. He arrives at Woolworths on a huge success package. He stands to earn £9 million over the next four years. If he can triple the share price to 20p, he will receive £4.8 million. There is also potential £2.2 million in bonuses on top of a £550,000 annual salary.

Mr North defended the size of this pay packet at the time of Mr Johnson’s appointment, saying: “We have a company that is hugely challenged on the operational side. If he delivers, he will have earned every penny of it.”

Few in retailing are inclined to agree. Even fewer think that he will pick up all of that £9 million.