Tesco is shopping for a new chairman

Tim Wallace
Follow Tim
Outgoing chairman Sir Richard Broadbent
SIR RICHARD Broadbent yesterday announced his plans to leave Tesco, and said he felt the need for a demonstration of accountability by the supermarket’s bosses.

His decision came as the firm revealed its pre-tax profits had slumped 92 per cent on the year to £112m in the first six months of its financial year.

Sales fell 4.4 per cent to £34bn, with the UK worst affected of all the global units – trading profits in Britain slumped 56 per cent to £499m.

By contrast, Asian trading profits slid only by 9.2 per cent to £260m, and European profits soared by 41.8 per cent to £76m.

At the same time, Tesco Bank – which unveiled its new current accounts only this summer – saw trading profits rise 15.9 per cent to £102m.

And an investigation by Deloitte found its accounting errors had over stated its financial position by £263m, not the £250m previously indicated. The group blamed tough competition from the hard discounters for some of the poor per­­­form­ance, and new chief executive Dave Lewis said he planned to squeeze more efficiencies out of the business.

Lewis said he was deliberately setting a more austere tone from the top of the firm in a bid to crush costs.

“My team regularly find me on the train going to an evening engagement, because the ticket I buy rather than taking a car in [saves the cost of] one colleague for one day in store,” he said.

“I’ve seen a change in behaviour in the last six or seven weeks around elements of cost.”

Outgoing chairman Broadbent is planning to leave in several months’ time, to allow the entirely new executive management team to bed in.

At that stage he hopes to have a successor lined up to take over smoothly.

Bookies at William Hill have ex-Asda boss Archie Norman as the 3/1 favourite. Sir Terry Leahy is being mentioned as an outside chance as he piloted Tesco into its glory years, while long-serving board member John Gildersleeve is another option.

If Richard Cousins could be tempted to leave his position as Compass chief executive, he could also be popular with shareholders.

“I don’t have to go, I’m not being pushed to go, there are not people on the board or shareholders saying you’ve got to go,” Broadbent said.

“I am going because I choose to go, and I am choosing to as it seems to me someone in my position has to decide, on behalf of the board, to demonstrate to the world the principle of taking acc­ount­ability, and I am doing that willingly and with a lot of clarity.”

And he argued this was an important moment to “draw a line” under past problems at Tesco.

“You cannot really say that no one has carried the can,” he said.

Former bosses are also suffering. Although ex-chief executive Philip Clarke is being paid his salary until January, his payment for being axed – one year’s salary, just over £1m – has been frozen until the probe into the £263m overstatement has concluded.

Tesco’s shares dived by another 6.56 per cent yesterday to 171p, after crashing from 230p in September before the accounting errors were revealed.

That lowly figure is a far cry from around 330p seen at the start of this year, and more than 440p in 2010.


The ex-Asda boss is known for turnarounds

Compass’ CEO has just joined Tesco’s board

Big beast Gildersleeve is a serial non-exec

Leahy built Tesco into an undisputed titan

Related articles