Tesco board offers under-fire CEO Philip Clarke its 'full support' as shares plummet
Tesco shares have plummeted 15% in the past year and are trading at a 10-year low
Friday 27 June 2014
Tesco boss Philip Clarke received a stay of execution today from his chairman as Sir Richard Broadbent gave the under-fire chief executive his full support under the glare of sceptical shareholders.
The chairman urged angry shareholders who have called for Clarke’s head to allow him more time to implement a turnaround in an acutely difficult climate, which has seen Tesco’s customers deserting it for discount rivals Aldi and Lidl.
Speaking at the FTSE 100 firm’s annual general meeting in Westminster, Broadbent said: “We, the board, are very aware that the company’s share price performance has been poor over the last 12 months. But it is important that we do not flinch from the decisions needed to shape a competitive business for the future.
“You, and we, want to see better performance. We believe that the considered steps we are taking will deliver better performance in a sustainable fashion for the long-term future of the business.”
The shares have plummeted 15% in the past year and are trading at a 10-year low.
This month Clarke revealed sales in the past three months dropped 3.7%, which he described as the worst fall in his 40-year career with the supermarket. Its market share has sunk and the one-time retailing behemoth has lost more customers in the past 12 months than at any time in the past 20 years.
Broadbent said Tesco said was making progress on plans to improve its stores and website, launching more Harris + Hoole coffee shops and Giraffe restaurants in stores and joining a price war while reducing promotions.
He added: “We are embarked on a series of measured, wide-ranging and in some cases painful changes to the business to reposition it, taking full account of the changes going on around us, rather than ignoring or minimising them.
“Implementing these initiatives has a cost and this has had an impact on short-term performance.”
His public support for Clarke will give the beleaguered chief executive some breathing space at a time that has seen him installed as the bookies’ favourite for the next boss to get the boot.
At last year’s event, former Tesco boss Lord MacLaurin launched a public attack on Clarke’s predecessor Sir Terry Leahy, claiming the current board needed more time to fix the problems created by Leahy. He did not attend this year’s meeting, but said earlier this week that Clarke should be given longer to fix the problems.
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