Tesco boss Philip Clarke quits
Tesco’s chief executive Philip Clarke has stepped down in a surprise move amid profit warnings from the struggling supermarket.
David Lewis, global president of personal care at Unilever, will take over from Mr Clarke on 1 October 2014, on a £1.25m basic salary.
He will face a challenge to turn around the UK’s biggest supermarket, which has experienced declining like-for-like sales for some time and a fall in UK groceries share from 31% two years ago to 28.5% today.
In its first quarter interim management statement in June, the retailer reported a 3.7% fall its like-for-like UK sales, following a 3.6% fall in UK trading profits in the year to 22 February 2014 . Today (21 July) it issued another profit warning.
“Current trading conditions are more challenging than we anticipated…and sales and trading profit in the first half of the year are somewhat below expectations,” said the group.
Meanwhile, the UK grocery market continues to experience tough trading, with one analyst calling April and June’s grocery spend the worst two months ever.
During his three years as Tesco boss, Mr Clarke has had to do “an enormous amount of troubleshooting”, said Clive Black, director of Shore Capital Stockbrokers.
“He had the worst external set of cards possible when he took over,” said Mr Black, with a deep consumer recession, penal shopping regulations and difficulties with the US venture, and then had to contend with huge change in the UK groceries market, including low consumer spending, the rise of discounters and online shopping.
Mr Lewis has 28 years of experience at Unilever in a wide variety of roles and global locations, including as chairman of Unilever UK and Ireland and president of the Americas.
“He’s a very rounded character to take this role over,” said Mr Black, “and should not be underestimated in any way.”
An “accelerated revolution” is expected to take place under Mr Lewis’ management, says Mr Black, although he will first want to take time to get to know the business. To take the supermarket out of its rut, Mr Black believes its new boss will need to make it more price competitive and simple in its supply chain and offering to customers.
It is unclear how Mr Lewis will take forward Mr Clarke’s pledges to British farmers and consumers made at the NFU conference last year.