Tesco to replace chief executive, Philip Clarke, with outsider from Unilever

By Richard Siddle

Published: 21 July, 2014

For the first time in decades Tesco is to be led by a chief executive that has been brought in from outside the company following the announcement that Philip Clarke is to step down in October.

Philip Clarke Tesco's Philip Clarke to be replaced as chief executiveTesco turns to outsider from Uniliver to replace Philip Clarke

For the first time in decades Tesco is to be led by a chief executive that has been brought in from outside the company following the announcement that Philip Clarke is to step down in October.

This morning's announcement had been kept firmly under wraps surprising both the media, the City and the wider retail industry.

After a troubled time as chief executive, Clarke is to hand over to Dave Lewis who joins the UK's number one supermarket chain from Unilever, who is currently president of personal care, with no direct experience of working in grocery retail.

Tesco's shared have risen by 2% this morning on the shock move indicating the City had lost faith in Clarke's ability to halt a series of profit warnings and slowdown in sales across the Tesco estate.

In a statement Tesco said: "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."

Tesco chairman, Richard Broadbent, added: "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."

The decision to replace Clarke with a Tesco outsider follows his comments as recently as June, when announcing quarterly like-for-like sales down by 3.7%, that he was "not going anywhere" and was committed to "a fundamental reshaping of Tesco".

He had even planned to host a party tomorrow night at the Victoria & Albert Museum in London to celebrate his 40^th year with the company. The party has now been cancelled.

Having said he wanted to stay with the company until he was at least 60, he will now be leaving at only 54.

In a personal statement, Clarke said this morning: "Having taken the business through the huge challenges of the last few years, I think this is the right moment to hand over responsibility."

There is some sympathy for Clarke both with the retail industry and the City that the Tesco he inherited from his predecessor, Sir Terry Leahy, was not in as good a shape as it appeared from the outside.

Bryan Roberts, for example, retail analyst at Kantar Retail, told the BBC: "Philip Clarke inherited a troubled business that had not seen enough investment in the UK and also featured misguided overseas expansion.

Twitter has been alive with debate amongst retail and City journalists about how Clarke will be remembered.

One feels for Philip Clarke. A good man in post at the wrong time, solving problems not of his making.

Dave Lewis of Uniliver is to be the first non-Tesco chief executive for decades

? Neil Saunders (@NeilRetail) July 21, 2014

@NeilRetail don't agree. He lost the workforce
? steve hawkes (@steve_hawkes) July 21, 2014

@steve_hawkes True, to a point. But the wider issues were not of his causing; the rot set in long before that!
? Neil Saunders (@NeilRetail) July 21, 2014

@NeilRetail the "rot" ? all relative.. Tesco was second biggest retailer in world with profits of more than £3bn - not too shabby
? steve hawkes (@steve_hawkes) July 21, 2014

@steve_hawkes @NeilRetail I'm with Neil on this. That profit figure was not sustainable. The rot had already set in.
? Richard Perks (@RichardP_Mintel) July 21, 2014

Of his successor, Broadbent 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 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."

Although Tesco is still by far the UK's biggest grocery retailer it is facing intense competition not only from the other major chains, from the rise of the hard discounters, Aldi and Lidl and the growth in more premium retailers such as Waitrose.

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