Sir Terry checks out . . . wiping £750m off Tesco
£750m shares blow as man who built supermarket giant retires early
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