Tesco appoints Dave Lewis as CEO

Tesco, UK's largest retailer, is set to usher in a new Chief Executive Officer after its another profit warning led to the exit of its current CEO, Philip Clarke. On Monday morning, the struggling retailer announced the impending appointment of Dave Lewis, who is set to join the company on 1 October, as

CEO in succession to Philip Clarke. Lewis, who is currently president of Unilever's personal care division, has been credited for “a number of business turnarounds” during his 28 year tenure with the company.

Clarke will remain with Tesco and offer support for the management transition until the end of January 2015. He will also retain his position as chairman of the company's joint venture with CRE in China until that date.

Lewis to help turnaround business for Tesco's

“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 Tesco's chairman Sir Richard Broadbent in a statement.

Broadbent added that Clarke “has achieved a great deal across all areas of the business in the face of considerable pressures” and noted that the Board were “deeply grateful to Philip for his contribution to Tesco, over the last four decades...his has been an outstanding achievement.”

News of his departure came amidst another profit warning for the retailer, as Tesco warned that sales and trading profit for the first half of the year would be below its previous predictions. The retailer has been struggling against discount chains such as Lidl and Aldi and reported its largest decline in sales for over twenty years last month.

Tesco warned that “current trading conditions are more challenging” than it anticipated and that an overall weaker market combined with its investments to improve its stores, widen its customer offer and build customer loyalty had led to trading profit being “somewhat below expectations.”

In April, Tesco announced its plans to bring its F&F clothing line to the US, through a franchise partnership with the Retail Group of America, and the opening of its first franchised stores in the country. This comes after the retailer exited the food retailing market in the US last year, due to a large reduction in its 2012-2013 profits.

Six weeks after Philip Clarke revealed to the Guardian that he had no plans to leave the company, he said in a statement: “Having taken the business through the huge challenges of the last few years, I think this is the right moment to hand over responsibility and I am delighted that Dave Lewis has agreed to join us.”

“I will do everything in my power to support him in taking the company forward through the next stage of its journey.”

“Lewis brings a wealth of international consumer experience and expertise in change management, business strategy, brand management and customer development,” added Broadbent. “He is already known to many people inside Tesco... [and] the board believes that with Dave's leadership Tesco will sustain and improve its leading position in the retail market.”

Natalie Berg, global research director at Planet Retail, commented on the new appointment of Lewis as CEO: “As a branding expert, Lewis’ first task will be to define Tesco. Philip Clarke himself has admitted that the brand has baggage. It doesn’t stand for value, yet it doesn’t stand for quality, and without a clear proposition we fear that Tesco will continue to lose customers to more relevant and better-defined channels."

“Being the first ‘outsider’ CEO in Tesco history, Lewis will quickly need to prove that having no direct retail experience isn’t necessarily an impediment to taking on the biggest job in UK retail. The board will be relying on his significant FMCG experience to help steer Tesco safely through the increasingly-fractious price skirmishes currently unsettling the industry."

“Despite Clarke’s relatively short, bumpy stint at the top, we have to remember that when he inherited the business three years ago, the focus was very much on international operations – some of which have since rightly been divested – while its core UK stores were overrun and underinvested."

Images: Tesco store, Philip Clarke