Today Tesco announced that CEO Philip Clarke is departing. The statement included a further profit warning which mentioned that the overall market is weaker and trading profit in the first half of the year is below expectations. It’s surely an acceptance that Mr Clarke had been given long enough to turn around the business, but had ultimately failed (he has been in the CEO role since March 2011).
The new CEO is to be Dave Lewis who joins from Unilever where he has worked for 28 years, mainly in personal care products markets. So the new CEO does not have a strong retail background? Yes that’s right – he does not! Flogging personal care products to supermarket buyers is surely a very different background to convincing retail consumers to buy food (and a few other products) in your shops, however strong his general management skills might be.
Mr Clarke is getting 12 months pay in lieu of notice, but apparently payable from when he ends a transitional period in six months time from the 1st October – so effectively he is getting 20 months notice. Plus he will remain Chairman of the Tesco joint venture in China (pay for that is not disclosed).
He also received some no doubt heartfelt plaudits such as “done a huge amount…”, “achieved a great deal”, “the board are deeply grateful” and “an outstanding achievement” to quote from the RNS announcement. But apparently not quite enough to justify his retention. Shareholders in Tesco might not agree with the praise as the share price of Tesco has moved from 400p to 282p during Mr Clarke’s reign. But it perked up 2% on the news of the change.