The City welcomed the news that former Asda boss Archie Norman is being lined up as new chairman of Tesco, with some suggesting the long wait to replace outgoing chair Sir Richard Broadbent could be down to avoid inheriting a “poisoned chalice”.
Mr Norman, 60, a former Conservative MP who is the chairman of ITV, told Tesco to spread the net widely before he would consider filling the vacant chairmanship of the supermarket, according to sources.
Having spearheaded Asda’s expansion and eventual sale to Walmart, Mr Norman would be a popular choice to replace Sir Richard, who is leaving following the supermarket’s £263m accounting scandal. But Mr Norman asked Tesco’s board to search for other candidates before he accepted.
A source said today: “Archie told Tesco he did not want to be anointed without a proper search by headhunters. However, he seems like the natural candidate.”
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Sir Ian Cheshire, the former chief executive of Kingfisher, and John Allan, deputy chairman at Dixons Carphone, had also been linked to the position, although Sir Ian has now been ruled out.
Clive Black, a retail analyst at Shore Capital, welcomed suggestions that Mr Norman would replace Sir Richard.
He said: “The chairman position, in taking so long to remedy, perhaps shows the perceived poisoned chalice that is this role. If Norman can be persuaded to complement and support Dave Lewis [the new chief executive] then we see it as a ‘win-win’; the incumbent is a wounded animal and Tesco can only benefit from a credible figurehead.
“Beyond Messrs Cousins and Ohlsson [Richard Cousins, from Compass, and Mikael Ohlsson, from Ikea] we would expect material change in the non-executive directors of the group that also played such a big part in the corporate shambles of recent times.”
Richard Clarke, a retail analyst at Bernstein, added: “Norman would be a great choice as chairman, with his experience of turning Asda from being nearly broke to a £6.7bn subsidiary of Wal-Mart. It is important that Tesco spends the time finding the right long-term replacement to see them through this difficult phase and to work with Dave Lewis.”
Tesco is also poised to complete one of the biggest rounds of redundancies in its history, with 10,000 jobs expecting to go, including around 6,000 at head office. Mr Black said the cuts were inevitable with Tesco slimming down its operations. He said: “Tesco was set up to be a truly global retailer and this is not going to be the case with the withdrawals from Japan and the US and the minority position [it has] now in China. Accordingly, the central support for such a business also needs to be deconstructed.”
The remaining jobs are expected to be cut from stores, including 43 sites across the country that are set to close by next month. A further 49 shops that were due to be built have been scrapped.
Mr Black explained that any retailer should be looking to tighten costs, especially since the recent rise of the discounters Aldi and Lidl forced the traditional “big four” supermarkets to slash margins.
Despite the heavy job losses, shares in Tesco have soared 47 per cent since December as the City welcomed Mr Lewis’s turnaround strategy.
Tesco declined to comment.Reuse content