THE boss of Northern Foods - owners of Baxenden's Hollands Pies - has resigned in the wake of a profits warning.

Chief executive Jo Stewart, who has worked for the company for 15 years, was leaving amid concern the parent company is "not operating to its full potential."

Group pre-tax profits for the first half are expected to be significantly lower than the comparable period last year, the Hull-based company said.

This has been blamed on performance in the convenience foods operations, reflecting "very challenging" trading conditions. Hollands Pies, which employs more than 600 people in Baxenden, is part of that division.

Company shares fell almost 12% in early trading to 141p.

Chairman Peter Blackburn is stepping in as executive chairman pending the appointment of a new chief executive.

He said: "Northern has an excellent product portfolio, strong consumer relationships, well-invested facilities and a solid financial base. It is a business which is capable of delivering consistent growth in earnings and shareholder value.

"However, the board believes that the company is not operating to its full potential, and we are seeking a significant improvement in performance.

"It will be the task of the whole management team to achieve this improvement."

The group's five largest customers are Marks & Spencer, Tesco, Sainsbury's, Asda and Safeway.