YOU’VE got a to have a pretty thick skin to be the boss of a UK supermarket.
Especially when you’ve got those cheeky boys at bookmaker Paddy Power giving out odds on who will be the first chief exec to get the boot.
At the moment, it’s a toss-up between Morrisons’ Dalton Philips, Tesco’s Philip Clarke and erstwhile Morrisons boss Marc Bolland who jumped ship to join Marks & Spencer.
That leaves just Asda’s Andy Clarke able to hold his head up high as Sainsbury’s Justin King has already announced his plans to leave.
Bolland was given a slight reprieve last week after M&S produced improved clothing sales, but Tesco’s results yesterday won’t have done Philip Clarke any good.
He insisted yesterday that he has no plans to go anywhere after a second year of falling profits cast doubt on his efforts to turn around the fortunes of Britain’s biggest retailer. “I have got no intention of going anywhere,” Clarke, a 40-year Tesco veteran, told reporters.
“All my waking hours are spent running Tesco. It’s what I love. I am going to see this thing through.”
However, his future will rest in the hands of shareholders and this week one of Tesco’s top 20 investors called Clarke the “wrong person for the job” with the “wrong strategy”.
Another shareholder said the strategy of cutting prices now to compete with increasingly popular German discounters Aldi and Lidl was a “shambles”, arguing that with wages improving it should instead focus on improving service. Clarke has vowed to win back shoppers with millions of pounds of price cuts, but said it would be “reckless” to disclose exactly how much it will cut prices by.
Tesco has already announced £200m in price cuts, which it said was “just a start”, but both Asda and Morrisons have laid out long-term plans for price cuts of up to £1bn over the next three years.
Shareholders believe that Tesco has taken its eye off the ball in its home market after failed attempts to break into the US and Japan and troubles in China and Europe have proved a distraction to its focus on the UK, where it still makes over two-thirds of its sales. Tesco’s problems have been compounded by troubles in the boardroom, with finance chief Laurie McIlwee announcing his resignation earlier this month, leaving Clarke as the only executive director on Tesco’s board.
McIlwee, who will stay in the job until a replacement is found, denied reports that he had clashed with Clarke over strategy.
Blackfriar has learned over the years to listen to the wise musings of Shore Capital analyst Clive Black who described Tesco’s annual figures as “very disappointing reading for its shareholders”.
“The business, once a shoppers’ champion and source of commendation for the United Kingdom’s business community is, under the stewardship of chairman Sir Richard Broadbent, in a cycle of what seems to be structural decline involving a sustained period of downgrades to earnings,” said Mr Black.
“To stem the tide of downgrades Tesco has a board that currently comprises one executive, CEO Philip Clarke...
“We cannot hide our disbelief that there has been no succession planning for the replacement of Mr Clarke’s CFO, Laurie McIlwee, whose resignation was announced on April 4.
“Accordingly, with an executive board of one person, we assert that shareholders can only look to the non-executive directors as the source of responsibility for the group’s current plight.
“We repeat our belief that a newly constructed board is necessary to take Tesco forward with a more conventional balance between executive and non executive directors; the present structure and performance does not reflect well upon Tesco’s chairman in our view.”
Maybe Paddy Power should extend the odds to include Sir Richard as well as Clarke.