Tesco 'turns corner' after woeful year

Supermarket giant set to appoint long-serving executive as new head of its UK operation as it seeks to put the setbacks of 2012 behind it

The grocery giant Tesco will seek to get on the front foot early in 2013 with the expected hiring of a new chief executive for its UK business, amid signs its domestic operation has turned a corner after a year to forget.

The world's third-biggest retailer has also appointed a new boss for its Malaysian operation: the latest in a long line of management changes.

Chris Bush, Tesco's UK chief operating officer, is the favourite to take over running its UK business. He could be appointed as soon as 10 January, alongside its Christmas trading statement.

The role of UK chief executive has been vacant since Tesco parted company with Richard Brasher in March, which was among many shocks that made 2012 one of the most turbulent in the company's 93-year history.

The supermarket suffered a profit warning in January, unveiled a £1bn investment to turnaround its UK operation, admitted it was "likely" to exit its Fresh & Easy business in the US and saw its first fall in half-year profits for nearly 20 years.

If he lands the UK top job, Tesco lifer Mr Bush – who has previously been chief executive of Tesco Thailand – will lead a business that accounts for two-thirds of the grocer's sales and is critical to getting the group's bottom line heading north again.

But Philip Clarke, the group's chief executive who has been effectively running the UK operation since March, is confident that Tesco has turned around its domestic operation. He recently boasted it was "back on form", which was backed up by Kantar Worldpanel data that showed Tesco's food and drink sales last month had outstripped Sainsbury's, Morrisons and Asda for the first time since Mr Clarke took the helm in early 2011.

But a weak performance on big-ticket non-food items, such as electricals, dragged down its UK like-for-like sales by 0.6 per cent in the third quarter to 24 November.

In the latest personnel changes, Tesco has poached Georg Fischer from the discounter Lidl to be chief executive of its Malaysian business. Mr Fischer will take the helm in March in Malaysia, which has been one of Tesco's best-performing countries this year, including robust underlying sales growth in its third quarter. At just 38, Mr Fischer would appear to be one to watch at Tesco.

But in the past two years, the grocer's former finance director Andy Higginson, online chief Laura Wade-Gery, Asian boss David Potts and Richard Brasher, who headed the UK arm, have all left.

Tesco also this month parted company with Tim Mason, the chief executive of Fresh & Easy, after announcing a strategic review of its 199-store US operation. Tesco launched the American chain to a fanfare in California, Arizona and Nevada in November 2007, but suffered losses of £850m over that period, despite investing more than £1bn. Alongside its latest results, Mr Clarke said: "It's likely but not certain that our presence in America will come to an end."

Mr Mason, a Tesco veteran who was also the group's deputy chief executive, has left the retailer after Mr Clarke concluded: "I did not think it was appropriate for Tim to lead the review."

Meanwhile, Sainsbury's has sought to nip in the bud speculation that Justin King, its chief executive since 2004, is considering stepping down next year. There is chatter that Mike Coupe, Sainsbury's group commercial director, has been lined up to take the helm, although the rumour is that an orderly handover could see Mr King remain at the grocer until 2014.

But Sainsbury's said on Friday: "This is pure speculation. Justin has made his commitment to the business clear and is excited about the opportunities to grow and develop it. Any discussion of succession is totally premature."

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