Tesco slump puts pressure on Clarke

TESCO looks set to post a second year of falling profits – piling pressure on embattled chief executive Philip Clarke.

City analysts expect Britain’s largest grocer to report a 15pc slump in annual profits to around £3bn when it publishes its results on Wednesday.

The results will round off another dismal year for Clarke since he succeeded Sir Terry Leahy as Tesco boss in 2011.

Clarke is in the midst of a £1bn turnaround plan, which was launched last year after the first fall in profits for nearly two decades. He has seen Tesco’s share of the market slump to 28.6pc – its lowest level for nearly ten years – amid fierce competition from discounters Aldi and Lidl.

Sales over the crucial Christmas and New Year period fell 2.4pc.

Clarke has also been rocked by the departure of finance director Laurie McIlwee who is stepping down after 14 years at the supermarket giant amid reports he has lost faith in his boss’s strategy.

Former Tesco directors are said to be ‘dismayed and angry’ at the latest developments with some apparently concerned that Clarke is taking the business ‘in the wrong direction’. Clive Black, an analyst at Shore Capital, said Tesco appears to be ‘a business that is not at ease with itself, united in its direction and comfortable within its own skin’.

He added: ‘Those cultural traits are reflected in the operational performance of Tesco, in our view, most notably in the UK, its core market, where it has been sustainably and materially underperforming.’

Tesco shares, which were trading at 492p in 2007 and 335p less than two months ago, fell 3p to 281.05p yesterday.