Following on from the appointment of Steve Johnson, analysts have given Woolworths a two-year reprieve to show improvements before they begin to judge its progress.

Speaking about his position on Johnson, the man who has taken on what is considered to be one of the toughest jobs in retail, analyst at Pali International Nick Bubb told Retail Week: "Johnson won't be judged until Christmas 2009. If he hasn't started to turn Woolies around by then people will start to worry."

It was echoed by Investec analyst David Jeary: "The classic turnaround for a chief executive is three years, but you'd want to see improvements after 12 to 18 months with things like gross margin and cost cutting in any retailer."

Woolworth's chairman Richard North hit back at those setting timetables, saying: "I'm really chuffed. We wanted someone who is bright, decisive and, most importantly, had a background in re-structuring under pressure."

However, the Johnson is already being seen as under-pressure to perform after the founder of Iceland, Malcolm Walker launched a takeover bid, thought to be worth £50 million, according to Brand Republic.

The bid – which was backed by Icelandic investment group Baugur Group that owns ten per cent of the company – was rejected by the Woolworths' board, saying that the bid was far too low.

It is thought if successful, Walker would seek to break up the group, separating its struggling retail division from its successful EUK wholesale division and DVD publishing business.