LONDON: Tesco is to ditch Chief Executive Philip Clarke and replace him with a turnaround specialist from Unilever, ending a disastrous three year reign as Britain’s biggest retailer warned it would again miss profit forecasts.
Clarke, who has spent more than £1bn on a failed recovery plan in Tesco’s main home market, will be succeeded on October 1 by Dave Lewis, who is credited with revamping a succession of businesses at the consumer goods group and is currently its global president of personal care.
Analysts said the appointment of a non-retailer and the first outside CEO in Tesco’s 95-year history could herald a major strategy re-think at the world’s third-biggest stores group, which could include big price cuts to win back customers. “A material change in UK trading strategy cannot be dismissed, which is likely to have considerable implications for the rest of the British sector,” said Shore Capital’s Clive Black.
The darling of the retail sector during two decades of uninterrupted earnings growth, Tesco started losing ground in the UK in the final years of long-standing CEO Terry Leahy’s tenure. Clarke issued his first profit warning in January 2012. More recently, it has been squeezed between discounters Aldi and Lidl at one end and upmarket grocers such as Waitrose at the other, and hurt by the slowest growth in the overall UK grocery sector for over a decade. Its attempts to respond were hampered by costly mistakes abroad, including a failed expansion into the US. 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 trimming prices as well as revamping stores and product ranges, but the firm’s market share and share price have continued to decline.
One former Tesco director said Clarke “confused activity with progress” and had failed to listen to colleagues. “Phil has never listened, Phil is a teller,” he said.
According to researchers Kantar Worldpanel, Tesco’s market share dropped to 28.9 percent in June from 30.7 percent when Clarke took over in March 2011. During the same period, Aldi grew to 4.7 percent from 2.1 percent and Lidl to 3.6 percent from 2.5 percent, while Sainsbury’s and Wal-Mart’s Asda — Tesco’s main rivals - remained largely stable. Reuters
