TWO MONTHS after a shock profit warning, Tesco said yesterday that the head of its biggest unit, Richard Brasher, will step down from the board immediately and leave the company in July.
Tesco chief executive Philip Clarke will assume responsibility for the UK business, which accounts for 65 per cent of sales.
Mr Brasher’s departure follows Mr Clarke’s decision to take a much closer involvement in the UK business, whose market share last month fell to levels not seen since 2005, according to industry data.
Mr Clarke said Mr Brasher’s exit “categorically does not signal another warning”.
“The UK remains Tesco’s biggest challenge and Mr Clarke’s more direct involvement should reassure shareholders that his focus remains on this key challenge,” JP Morgan Cazenove analyst Matthew Truman said in an email. He has an “overweight” recommendation on the stock.
Some analysts expressed concern that Mr Clarke may be taking on too much.
“It is not a good sign when the CEO of a huge global group like Tesco tries to micromanage the UK business,” said independent retail analyst Nick Bubb. “It is hard to see how this will end happily. ”
Tesco shares fell as much as 1.2 per cent to 320.85 pence as of 9.15am in London.
Mr Brasher, who cancelled a planned speech yesterday at the Retail Week conference in London, oversaw the failed Big Price Drop campaign that prompted Tesco to say in January that it would miss earnings estimates, sending shares down 16 per cent.
The company has promised to boost staff numbers by 20,000 and improve service, stores and fresh food to lure back customers after market share slid below 30 per cent.
“I have decided to assume responsibility as the CEO of our UK business at this very important time,” Mr Clarke said in the statement. “This greater focus will allow me to oversee the improvements that are so important for customers.”
Mr Brasher (50) spent 29 years at Tesco. He was given the newly-created role of chief executive for the UK business when Mr Clarke was named group chief executive last march. – (Bloomberg /Reuters)
