UK: Tesco shares climb as CEO Clarke announces departure
Clarke will hand the reigns to David Lewis
Tesco's share price climbed this morning (21 July) on news the retail giant's CEO Philip Clarke is to step down, making way for Unilever executive Dave Lewis.
Weeks after Clarke revealed its third successive quarterly decline in sales, the chief executive said he thought it was "the right moment to hand over responsibility".
The reigns will be handed to Lewis, the global president of personal care for Unilever, on 1 October. Clarke will remain at Tesco to support the transition until the end of January 2015.
"Having guided Tesco through a substantial re-positioning in challenging markets, Philip Clarke agreed with the board that this is the appropriate moment to hand over to a new leader with fresh perspectives and a new profile," said chairman Sir Richard Broadbent.
"Philip has done a huge amount to set a clear direction and re-position Tesco to meet the rapid changes taking place in the retail market. He has achieved a great deal across all areas of the business in the face of considerable pressures," he added.
In addition to the announcement on Clarke's move, Tesco issued another profit warning, noting current trading conditions are "more challenging than we anticipated at the time of our first quarter interim management statement".
"The overall market is weaker and, combined with the increasing investments we are making to improve the customer offer and to build long term loyalty, this means that sales and trading profit in the first half of the year are somewhat below expectations," it said.
Tesco said the outlook for the full year will be influenced by the result of its investments, market conditions, and any steps taken during the remainder of the year to improve its customer offer.
Shore Capital analyst Clive Black welcomed the appointment of Lewis as "a first class executive".
"We await Mr. Lewis' prognosis for the business, particularly the UK, with considerable interest. We believe his appointment will be greeted with a great sense of encouragement by a store staff that has been pummelled in recent years so leading to a collapse in morale. A material change in UK trading strategy cannot be dismissed, which is likely to have considerable implications for the rest of the British sector."
The move follows the recent appointment of Alan Stewart, finance chief of Marks & Spencer, as its CFO.
Click here to read an analysis on Tesco and its strategy for the group's clothing line.
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