Clarke out as Tesco looks to rebound
Written by Scott Thompson
Unilever president Dave Lewis has been announced as the new Tesco chief executive officer, joining in October and taking the reins from Philip Clarke. Clarke will continue as chief exec until that date when he will step down from the Board but will continue to be available to support the transition until the end of January 2015.
Lewis will receive a salary of £1.25 million plus benefits for taking on the biggest job in UK retail. His appointment is something of a gamble and a change of direction for the grocery giant, given he has no direct retail experience and is the company's first 'outsider' CEO.
Tesco has struggled since Clarke took over from Sir Terry Leahy in 2011, due in part to a resurgent Sainsbury's and the rise and rise of discounters Lidl and Aldi. According to a statement issued by the grocery giant: "Current trading conditions are more challenging than we anticipated at the time of our first quarter interim management statement on 4 June. The overall market is weaker and, combined with the increasing investments we are making to improve the customer offer and to build long-term loyalty, this means that sales and trading profit in the first half of the year are somewhat below expectations. The outlook for the full year will be influenced by the extent to which benefits from the investments we are making begin to be seen; by conditions in the overall market; and by any steps that may be taken during the remainder of the year to improve our customer offer further."
He has come under increasing pressure from shareholders in recent times and Leahy added to his woes during June, commenting that he was “very disappointed” with the retailer's performance and that it needed to get its confidence back.
However, chairman, Sir Richard Broadbent, somewhat predicatably tried to talk up Clarke's tenure: "Having guided Tesco through a substantial re-positioning in challenging markets, 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. Philip has done a huge amount to set a clear direction and re-position 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. The Board are deeply grateful to Philip for his contribution to Tesco, over the last four decades, as well as more recently as Chief Executive. His has been an outstanding achievement."
He added: "Dave Lewis brings a wealth of international consumer experience and expertise in change management, business strategy, brand management and customer development. He is already known to many people inside Tesco having worked with the business over many years in his roles at Unilever. The Board believes that with Dave’s leadership Tesco will sustain and improve its leading position in the retail market."
Clarke commented: "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. Dave has worked with Tesco directly or indirectly over many years and is well-known within the business. I will do everything in my power to support him in taking the company forward through the next stage of its journey."