Tesco CEO checks out as turnaround plan struggles to win grocery war
Tesco chief executive Philip Clarke is leaving the company in October as investors tire of waiting for a long-promised turnaround at Britain's largest retailer.
After taking on the CEO mantle just over three years ago, Mr Clarke has struggled to temper an assault on the company's business from discount retailers including Aldi and Lidl, and also from high-end chains such as Waitrose.
He's being replaced by Dave Lewis, the head of Unilever's personal care division. Mr Clarke has spent most of his adult life working with Tesco.
Since he took over the CEO role from Terry Leahy in 2011 Tesco's market share in the UK has slipped from 30.2pc to 28.9pc.
Its international business has also suffered, with much of the decline in profitability at that division directly attributable to a weaker Tesco performance in Ireland.
Mr Clarke's October departure coincides with the departure of former chief financial officer Laurie McIlwee. He announced in April that he was leaving, but will remain on as CFO emeritus until the autumn.
Releasing full-year results for Tesco in April, Mr McIlwee said that a difficult performance in Ireland during the retailer's last financial year had played a significant role in reducing the group's profits across its European business outside the UK, by almost 33pc to £238m.
Less than a year after taking over from Mr Leahy, Mr Clarke issued the first earnings warning for Tesco in 20 years.
Structural changes in the grocery market - with increased competition and altered shopping habits - have also weighed on efforts to turn the retailer around.
Tesco also warned yesterday that it has found current trading to be "more challenging" than expected. It said first-half sales and profit are "somewhat below expectations".
"We would expect the market to offset the disappointment of the downgrades with a sense of relief that the group is entering a potentially more effective chapter in its development," said Clive Black, an analyst at Shore Capital.
Some analysts expressed surprise at Mr Lewis' appointment as CEO, citing his lack of retail experience. But his experience with brands may help Tesco to combat discounters and other rivals in its on-going price war.