‘Two-jobs’ Clarke defends Tesco role
TESCO boss Philip Clarke yesterday stubbornly defended his twin role at the helm of the UK’S largest grocer in spite of falling domestic profits and dwindling margins.
Clarke, who succeeded Sir Terry Leahy as chief executive, also denied that the supermarket giant is in trouble.
His comments came as the group posted a 1pc drop in annual profits from its UK stores to £2.5bn. Margins in Britain also slimmed to 5.79pc, down from 6.14pc last year.
at a group level, underlying pre-tax profit rose 1.6pc to £3.9bn – record takings for the grocer. But between december and February underlying UK sales dropped by 1.6pc, and during the whole year they fell by 0.9pc.
The accelerating sales drop culminated in January with the first profits warning in 20 years – an announcement which wiped off a fifth of the company’s value in a single day.
UK boss Richard Brasher left in the wake of the announcement, leaving Clarke to pick up the extra work on top of his role as chief executive – a decision he yesterday defended.
‘It’s not ideal but you can only have one captain on the pitch,’ Clarke said, adding that he would stay in the role for the time being.
He added: ‘you might have the impression that Tesco is struggling. Well, we are not.’
Tesco shares, which are down 20pc since the start of 2012, fell 7.25p to 321.05p. City analyst Philip dorgan at Panmure Gordon said the group was facing a ‘considerable management challenge’ and its UK success hinged on ‘doing 1,000 things 1pc better’.
Clarke, who now straddles the group and the UK business, launched a £1bn rescue plan after a dire year for the retail leviathan.
His six point plan will see three years of work crammed into one 12- month period. Measures include taking on 8,000 more staff and sprucing up one quarter of the group’s British stores – but the spending spree will sap UK profits further.
His turnaround plan will see expansion plans scaled back by up to 40pc as he admitted the group previously opened too many new stores, too fast.
It will pump £1bn into the project, and will focus more on its ‘Click and Collect’ service where customers shop online then pick up their goods in store.
Tesco also revealed that, over the pond, its Fresh and Easy stores are still making losses.
But it said 30 of the 186 US outlets were now in the black, and more than 50 stores were ‘only’ losing up to $5,000 (£3,119) a week.