A branch of troubled giant Tesco. Photocredit: Geograph http://www.geograph.org.uk/photo/862552
Tesco’s UK head, Richard Brasher, has stepped down from his role, after only a year at the helm of the supermarket colossus. Tesco’s sales were down over Christmas, and Philip Clarke, the Tesco Chief Executive, issued a profit warning – the first in over twenty years. Brasher’s move has, according to The Daily Telegraph, been catalysed by Clarke’s decision to take closer involvement with the British arm of the business. Brasher will leave the company in July, leaving Philip Clarke to take over his role. The resignation, said Sky News, comes after Tesco announced it would be creating 20,000 jobs. The supermarket has a large share in Asia and Eastern Europe, but its home sales continue to be two thirds of its income.
Retail Week labelled the departure “sensational.” Tesco’s sales, reported the BBC, did not revive, despite £500 million being spent on price cuts. It’s also planning an overhaul of its stores.
“I have decided to assume responsibility as the CEO of our UK business at this very important time. I completely understand why Richard has decided to leave and want to thank him for the great contribution he has made over many years,” said Philip Clarke, quoted on the BBC.
What’s the background? Tesco’s market share dropped to 29.7 per cent in February, whereas previously it had been a massive 30.3 per cent. After its profit warning, shares plummetted 16 per cent. Its stores are also thought to be in need of a revamp, with customers wanting more stylish layouts.
So what’s going on? The BBC quoted an independent retail analyst, Robert Clark, who said that Tesco’s been “underperforming” for the last three years or so. “”The Price Drop Campaign didn’t cut the mustard and failed to address what competition was doing – nibbling away at segments of its market share.”
Is there more to it? Other analysts suggested that a personality clash between Clarke and Brasher might have been a factor too. “It’s reasonably well known that there were egos clashing in the business,” said Byran Roberts, a director at Kantar Retail.
Analysts’ thoughts. The Guardianrounded up analysts’ reactions. Shore Capital said that this is part of the “generational adjustment” that’s happened since Sir Terry Leahy left in March 2010. JP Morgan Cazenove said that Clarke’s “more direct involvement” would “reassure shareholders.” Panmure said it was “difficult to have two captains on the bridge”, and for once, they believed the official version.
