News Column

Tesco boss Philip Clarke quits after another profit warning

July 22, 2014

Jennifer Rankin,

The boss of the UK's biggest supermarket Tesco is standing down in the autumn after the group issued another profits warning.

Philip Clarke's replacement as chief executive has been named as Dave Lewis, who leads Unilever's personal care business and was described by Tesco as "responsible for a number of business turnarounds".

The shock departure came as Tesco warned that sales and trading profits for the first half of the year would be lower than expected.

Tesco has been struggling in the face of fierce competition from discounters Aldi and Lidl, and reported its biggest-ever decline in sales in at least 20 years last month. City investors have been running out of patience with Clarke's ability to turn around the company.

Tesco shares rose almost 2% in early trading, to 290p, despite the profits warning, reflecting hopes for the new boss.

The scale of the job facing Lewis was emphasised by the profits warning Tesco issued on Monday morning. The supermarket said trading conditions were "more challenging" than had been anticipated, blaming a weak market and the cost of improvements to their stores, for bringing profits "somewhat below expectations".

Recent industry data shows that Tesco appears to have lost more than 1m customer visits per week, worth £25m in sales, with its market share showing the biggest fall for at least 20 years.

Lewis becomes chief executive on 1†October. Tesco said that Clarke will be available until the end of January to help with the transition. Lewis will earn a salary of £1.25m, plus so-far undisclosed Tesco shares and benefits that are likely to push his take-home pay far higher. He will also pick up £525,000 in lieu of giving up his bonus from Unilever.

Tesco chairman Sir Richard Broadbent said that Lewis was already known to many people inside Tesco, having worked with the supermarket "over many years in his roles at Unilever". He added that Lewis would "sustain and improve" Tesco's position in the retail market.

He said the board was deeply grateful to Clarke. "Philip has done a huge amount to set a clear direction and reposition Tesco to meet the rapid changes taking place in the retail market. He has achieved a great deal across all areas of the business in the face of considerable pressures."

Clarke, who just six weeks ago said he had no plans to leave Tesco, said on Monday: "Having taken the business through the huge challenges of the last few years, I think this is the right moment to hand over responsibility and I am delighted that Dave Lewis has agreed to join us."

The departure of Clarke, who joined the supermarket as a school-boy shelf stacker in 1974, means that by the end of the year both Tesco's top two managers will have left the company.

Tesco chief financial officer Laurie McIlwee is due to leave the supermarket chain in October, having announced his departure in April, following rumours of splits with Clarke.

Tesco's incoming boss, who is 48, has spent over three decades at Unilever, where he has been UK chairman and president for the Americas. He is currently global president of personal care.

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Source: Guardian Web

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