Tesco bolsters board following £250 million profit probe

Richard Cousins and former Ikea boss Mikael Ohlsson will join the board next month

Alex Lawson
Monday 06 October 2014 16:24
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Tesco working to rebuild its reputation
Tesco working to rebuild its reputation

Tesco has strengthened its board with the appointment of two new non-executive directors as it looks to rebuild its corporate reputation following its £250 million accounting black hole scandal.

Former Ikea boss Mikael Ohlsson will be joined by the chief executive of catering firm Compass, Richard Cousins, in taking up non-executive directorships at Tesco next month.

The appointments come after Tesco last month discovered a £250 million black hole in its profit forecasts, causing shares to plunge to an 11-year low. Shareholders responded enthusiastically to the recruits today and sent shares — which had dropped 25 per cent since the shock announcement — soaring 2.3 per cent to 176.15p.

Tesco has come under pressure over the amount of retail experience on its board since new chief executive Dave Lewis — a former Unilever director who admitted to The Independent last month that “I have never run a shop in my life” — took the helm. Chairman Richard Broadbent today praised the skills of the board’s newcomers, saying that Ohlsson and Cousins had “been updated on and are wholly supportive of the steps being taken by the new management team to rebuild trust in Tesco and to focus all the resources of the business to deliver value to our customers”.

Bernstein Research analyst Richard Clarke said: “Mikael Ohlsson’s appointment is a welcome one, his experience with a successful retailer is invaluable. It’s so different — you have so many products and staff to deal with and your customers are inside the business, in the shops.

“However, Ikea’s model is to roll out the same shop everywhere, where Tesco needs to move away from that and be more local.”

Shore Capital analyst Clive Black described the appointments as “particularly significant given the near-comical series of events that have materially tarnished Tesco’s reputation”. Black does not expect any strategic plan on a possible fund-raising or investment to be revealed until next year.

Cousins’ appointment is a surprise after he stepped aside from the board of Strepsils and Dettol-maker Reckitt Benckiser in May to focus on the day-to-day running of Compass. Lewis — who this weekend said that Tesco would sell its five corporate jets after it took delivery of a £31 million Gulfstream G550 plane — is attempting to turn Tesco’s fortunes around.

The supermarket chain has been wounded by a price war with budget German chains Aldi and Lidl which has exacerbated problems in its shops that had already driven customers away.

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