Tesco boss to quit after profit warningComment on this story
London - Tesco boss Philip Clarke will step down after Britain’s biggest retailer warned it would miss profit forecasts, bringing an abrupt end to a disastrous three-year reign.
Clarke, who has spent more than £1 billion ($18bn) on a failed turnaround plan, will be replaced in October by Unilever executive Dave Lewis, who is credited with revamping a number of businesses at the consumer goods group.
The darling of the retail sector during two decades of uninterrupted earnings growth, Tesco started losing ground in its main UK market in the final years of long-standing chief executive Terry Leahy’s tenure.
More recently it has been squeezed between discounters Aldi and Lidl at the one end and upmarket grocers such as Waitrose at the other, and hurt by the slowest growth in the overall UK grocery sector for a decade.
Its attempts to respond were hampered by costly mistakes abroad, including a failed expansion into the US, originally a Leahy initiative.
Clarke, a 40-year Tesco veteran who started as a teenager stacking shelves in a store managed by his father, fought back with a wide-ranging plan including cutting prices, as well as revamping stores and product ranges, but the firm’s market share has continued to decline.
“The result of trying to change everything was that he achieved little and both customers and shareholders were let down,” said Phil Dorrell, the director of consultancy Retail Remedy.
Bruno Monteyne, a retail analyst at Sanford C Bernstein, said Tesco needed to better tailor its offering to local markets, which could include value, mid-market and high-end stores.
“The minimum expectation we would have is that he [Lewis] brings a completely new pair of eyes, a new strategy, to Tesco, and that might be better coming from another company,” he added.
Reflecting optimism about the change in command, Tesco shares, which had been languishing near 10-year lows, rose about 3.5 percent in early trade.
Jefferies analyst Martin Deboo said Lewis had been viewed in some quarters as the heir apparent to Unilever chief executive Paul Polman, and had a track record of turning around businesses in Argentina and Indonesia as well as Britain.
“Tesco’s gain is Unilever’s loss,” Deboo said. “He [Lewis] knows the UK grocery industry very well from the supply side, which is an advantage.
“He’s smart, entrepreneurial and commercial but at the same time he’s unpretentious. I think he’ll be a good leader and a good cultural fit.”
Lewis was the chairman of Unilever UK and Ireland from 2007 until 2010, when he became president of the Americas. He took on his latest role as head of personal care products in 2011.
Lewis will work alongside new Tesco finance chief Alan Stewart, who quit Marks & Spencer earlier this month but may not start at Tesco for six months due to a non-compete clause in his contract.
“Philip Clarke agreed with the board that this is the appropriate moment to hand over to a new leader with fresh perspectives and a new profile,” said Tesco chairman Richard Broadbent, who had backed Clarke as chief executive at its annual shareholder meeting last month.
Tesco said trading had turned tougher than expected at the time of its first-quarter update on June 4. – Reuters