Tesco shares jump on Clarke departure

A picture shows a trolly of shopping a Tesco store in Liverpool, north west England on April 16, 2014. Supermarket giant Tesco announced a second drop in annual profits in a row on April 16, leaving Britain's biggest retailer hoping that recent expansion (PAUL ELLIS/AFP/Getty Images)

Shares in Tesco climbed more than 2 per cent in early London trading on the news that chief executive Philip Clarke will be replaced by Unilever’s Dave Lewis in October.

Mr Clarke announced his departure from board on Monday and will officially leave his role on 1 October. He will be replaced by Unilever executive Dave Lewis, although he will continue in a support role until the end of January.

Mr Lewis - president of the personal care division producing brands such as Lynx, Dove, Sure and Pond's - is the man tasked with turning around the company's fortunes, and the rise in share prices would appear to confirm there is confidence in his ability to do just that.

“Like David Moyes, Phil Clarke found following a highly respected, long-serving chief executive a bit of a challenge,” Chris White, head of UK equities at City investor Premier Asset Management, told The Independent. “While Dave Lewis seems to be well thought of, quite what he will be able to do about the march of discounters such as Aldi and Lidl is a moot point.”

Chris Murphy at Aviva Investors said: “We had expected this news, although maybe it is a bit sooner than we thought.”

Bernstein analyst Bruno Monteyne — a former Tesco employee and critic of Clarke — said the news confirmed Tesco’s strategy was “not working”.

Meanwhile, trading was subdued amid increasing global tensions over the crash of the Malaysian passenger jet in Ukraine, with the FTSE 100 Index 25.8 points lower to 6723.7.

Rival Morrisons was one of the leading fallers in London's top flight, shedding 2 per cent, or 4.3p, to 173.7p, while Sainsbury's was off 4.8p at 320p. Unilever shares were 9p lower at 2623p.

Elsewhere, shares in BSkyB were 16.25p lower at 901.25p after it acquired a 70 per cent share in Love Productions, one of the UK's leading independent production companies.