Sir Terry checks out . . . wip­ing £750m off Tesco

£750m shares blow as man who built su­per­mar­ket gi­ant re­tires early

Daily Mail - - Front Page - By Sean Poul­ter Con­sumer Af­fairs Edi­tor

MORE than £750mil­lion was wiped off the Tesco mar­ket value yes­ter­day fol­low­ing the sur­prise an­nounce­ment that chief ex­ec­u­tive Sir Terry Leahy is to re­tire.

Its shares fell by more than 2 per cent amid turmoil in the mar­ket.

Sir Terry has been in charge of Tesco for 14 years and is re­spon­si­ble for turn­ing it into a for­mi­da­ble force.

It is un­der­stood he will go next March when he will be 55, and there was spec­u­la­tion that he will be­come a peer and be given a po­lit­i­cal role by Prime Min­is­ter David Cameron.

Sir Terry has spent most of his ca­reer work­ing for the su­per­mar­ket gi­ant.

He be­came chief ex­ec­u­tive shortly af­ter Tesco over­took Sains­bury’s to be­come the UK’s largest re­tailer, and was heav­ily in­volved in set­ting up the firm’s Club­card, which is now used by 16mil­lion cus­tomers.

The com­pany has also be­come Bri­tain’s biggest pri­vate sec­tor em­ployer, with 300,000 UK staff.

MORE than £750mil­lion was wiped off the Tesco mar­ket value yes­ter­day af­ter the news that chief ex­ec­u­tive Sir Terry Leahy is to re­tire aged just 55.

The an­nounce­ment sur­prised the City and saw shares in Bri­tain’s biggest and rich­est re­tailer drop by more than 2 per cent on a day of mar­ket turmoil.

Sir Terry has been in charge of Tesco for 14 years, a pe­riod where it has achieved stag­ger­ing growth – now tak­ing around £1 in ev­ery £3 spent on gro­ceries.

His de­ci­sion to go next March, when he will be 55, comes at a time when many peo­ple of that age will be fac­ing an ex­tra ten to 15 years in work.

Sir Terry has re­fused to spell out his plans, but there are sus­pi­cions he will be­come a peer and be given a top po­lit­i­cal post by the Cameron regime af­ter he steps down.

Un­like more flam­boy­ant busi­ness lead­ers such as Lord Sugar and Sir Philip Green, it is thought un­likely he will seek out a high me­dia pro­file.

Sir Terry, who has in­vested his en­tire work­ing life in mak­ing Tesco a world force, has been in the top job dur­ing a gru­elling time for the High Street.

Tesco be­came the UK’s biggest su­per­mar­ket in 1995 and now dwarfs its two clos­est ri­vals, Asda and Sains­bury’s.

At the same time, the com­pany has be­come Bri­tain’s biggest pri­vate sec­tor

‘It is los­ing its best player’

em­ployer with more than 300,000 staff in this coun­try and a fur­ther 172,000 over­seas.

The blunt busi­ness leader has likened his man­age­ment style to the ‘lead by ex­am­ple’ ef­forts of for­mer Eng­land rugby cap­tain Martin John­son bat­tling for the ball at the bot­tom of a ruck.

His rise to be­come the head of the most pow­er­ful re­tailer in the UK is all the more re­mark­able given that he grew up in a pre­fab maisonette in the Belle Vale area of Liver­pool.

The Ever­ton fan, the only one of four broth­ers who went on to a uni­ver­sity ed­u­ca­tion, is hand­ing over to fel­low Liver­pudlian and Liver­pool sup­porter Philip Clarke, cur­rently Tesco’s di­rec­tor of in­ter­na­tional op­er­a­tions and IT.

Like Sir Terry, Mr Clarke, 50, has spent most of his work­ing life in­side the Tesco ma­chine.

He started at the su­per­mar­ket in a part-time job while he was at school – as a 14-year-old shelf stacker – and later joined the man­age­ment train­ing scheme af­ter leav­ing uni­ver­sity.

Sir Terry’s ten­ure trans­formed Tesco from sim­ply be­ing a store sell­ing gro­ceries.

It is now a bank, a £1bil­lion-ayear cloth­ing busi­ness and the UK’s biggest in­ter­net re­tailer, while it is in the top five for books, toys, elec­tri­cal equip­ment and home prod­ucts.

The firm’s Club­card, which Sir Terry was heav­ily in­volved in set­ting up, has a stag­ger­ing 16mil­lion reg­u­lar users, more than any other sin­gle loy­alty or credit card.

City an­a­lysts re­acted with some shock to the fact Tesco, which is the world’s third largest re­tailer be­hind Wal­Mart of the U.S. and Car­refour of France, is los­ing its leader.

Shares in the group fell by 2.38 per cent on the day to stand at 397.4p, wip­ing £778mil­lion off the com­pany’s value.

The fall was ex­ag­ger­ated by the fact the value of shares in the UK’s top 100 com­pa­nies fell by 0.8 per cent yes­ter­day. His de­par­ture was thought strange con­sid­er­ing dif­fi­cul­ties Tesco has faced in es­tab­lish­ing it­self in the U.S. with a chain called Fresh & Easy, which lost £165mil­lion last year.

An­drew Por­te­ous, an an­a­lyst at Evo­lu­tion Se­cu­ri­ties, said: ‘We were ex­pect­ing it would be a cou­ple of years away. Tesco is los­ing its best player and there­fore the team is weak­ened.’

Sir Terry col­lected £5.2mil­lion last year in pay, bonuses and perks, while he is un­der­stood to have shares in Tesco worth more than £10mil­lion.

He said he plans to con­cen­trate on pri­vate in­vest­ments and will re­tain a ma­jor share­hold­ing in Tesco. The store’s chair­man, David Reid, said: ‘Terry has made an un­ri­valled con­tri­bu­tion over a pro­longed pe­riod.’ He de­scribed him as ‘un­doubt­edly one of the lead­ing busi­ness­men of his gen­er­a­tion’.

How­ever, there were brick­bats as well as bou­quets.

Friends of the Earth cam­paigner Helen Rimmer said: ‘Bri­tish farm­ers, com­mu­ni­ties and the en­vi­ron­ment have all suf­fered at the hands of the chain’s ag­gres­sive ex­pan­sion.

‘Tesco now con­trols a third of the mar­ket share – its stores are pop­ping up on vir­tu­ally ev­ery street corner, putting lo­cal firms out of busi­ness and tak­ing choice away from shop­pers.’

Farewell: Sir Terry Leahy with wife Ali­son

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