Global chal­lenge for the new boy

Daily Mail - - City & Finance - By Ru­pert Steiner

TESCO’S long­stand­ing chief ex­ec­u­tive Sir Terry Leahy sur­prised the mar­ket yes­ter­day by an­nounc­ing plans to re­tire early af­ter 14 years at the helm.

For­mer shelf stacker Phil Clarke, the rel­a­tively low pro­file head of the in­ter­na­tional di­vi­sion, has been anointed his suc­ces­sor, mark­ing the im­por­tance of the over­seas busi­nesses to Tesco’s fu­ture growth.

The group is now in 14 dif­fer­ent coun­tries and em­ploys 472,000 work­ers in 4,811 stores world­wide and on some mea­sures is now the world’s third largest gro­cer.

Clarke’s ap­point­ment comes at a time of un­par­al­leled change at the top of Bri­tain’s gro­cery giants.

New faces have ar­rived at Mor­risons and Asda, while Marks & Spencer, as in­flu­en­tial in the food as it is in women’s knick­ers, has also ap­pointed a suc­ces­sor to Sir Stu­art Rose.

Whether it is mov­ing into bank­ing or set­ting up on the in­ter­net, Tesco have al­ways been com­mend­ably cau­tious. And so it will be with the han­dover of re­spon­si­bil­i­ties from Leahy to Clarke, which will take nine months.

The cur­rent boss will head for re­tire­ment next March, some three years ear­lier than when many had ex­pected him to de­part.

Leahy has en­joyed a phe­nom­e­nal ca­reer, join­ing a busi­ness that was the No.3 gro­cer in the UK and help­ing to grow it into a gi­ant of the in­ter­na­tional stage. ‘ Tesco has been my whole life,’ said Leahy. ‘It will al­ways have a spe­cial place.’

The shares dipped 9.7p to 397.4p, wip­ing al­most £778m off the value of the su­per­mar­ket group and re­veal­ing just how highly Leahy is prized. Dave McCarthy, the re­tail an­a­lyst at City firm Evo­lu­tion, said: ‘Tesco is los­ing its best player and there­fore the team is weak­ened.’

But Clarke, a Tesco lifer, prob­a­bly bleeds blue and red, the com­pany’s trade­mark colours. As a 14-year-old he worked at his lo­cal Tesco where his fa­ther was store man­ager.

Af­ter grad­u­at­ing in eco­nom­ics from Liver­pool Uni­ver­sity he joined Tesco’s man­age­ment train­ing scheme, work­ing in the UK busi­ness, lo­gis­tics and then the in­ter­na­tional di­vi­sion. He was ap­pointed to the board i n 1998 and will be­come only the sixth chief ex­ec­u­tive in the firm’s 91-year his­tory.

Leahy will be a tough act to fol­low and Clarke will take up his role at a piv­otal pe­riod for the busi­ness. The in­dus­try is head­ing for its most dif­fi­cult time in years. Ri­vals are dou­bling their store-open­ing pro­grammes in emerg­ing mar­kets in a dash to es­tab­lish their brands and gain mar­ket share.

Un­der­ly­ing sales across the in­dus­try are cur­rently neg­a­tive as dis­cre­tionary in­come is fall­ing. And shop­pers are brac­ing them­selves for tax hikes as gov­ern­ments tackle world­wide debt moun­tains.

But the biggest sin­gle strat­egy de­ci­sion Clarke has to make is on the long-term com­mit­ment to Amer­i­can start-up Fresh and Easy. The fledg­ling busi­ness, es­tab­lished to take on Wal-Mart in its own back yard, is a drain on prof­its and has so far ac­cu­mu­lated a £400m loss.

It was very much Leahy’s baby, and the de­part­ing re­tail chief was so con­fi­dent in its suc­cess he linked his bonus to its per­for­mance.

Tim Ma­son, head of Fresh & Easy, has been given the ad­di­tional ti­tle of deputy chief ex­ec­u­tive, which is seen as a sop to keep him at Tesco. But it is also part of a wider board­room shake-up. David Potts will be­come the first chief ex­ec­u­tive of the grow­ing Asia busi­ness while Richard Basher, cur­rently com­mer­cial di­rec­tor, will as­sume the newly-cre­ated role of chief of the UK busi­ness. Evo­lu­tion’s McCarthy said: ‘Over half the board will have changed re­spon­si­bil­i­ties in 2011.’ But as for re­tail di­rec­tor Andy Hig­gin­son and fi­nance boss Lau­rie Mcll­wee, who were top lead­er­ship con­tenders, chair­man David Reid was fresh out of spe­cial of­fers.

Clarke will be hop­ing they stay as he takes up his new po­si­tion.

For­mer shelf stacker Phil Clarke has bagged the top job and will re­place Sir Terry Leahy next year

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.