Tesco chief Clarke needs patient investors, says former boss

24th Jun 2014 14:52

Former Tesco boss Lord MacLaurin has urged investors to be patient with current Chief Executive Officer (CEO) Philip Clarke and said that discounters were biting hard into all the Big Four grocers and were not likely to let up.According to The Independent, Lord MacLaurin laid the blame for the company's current difficulties on Clarke's predecessor Sir Terry Leahy, who he said had left the business in a precarious position and said investors' and analysts' expectations for a turnaround were too demanding.MacLaurin, who was Chairman of Tesco for 12 years until 1997, said Clarke was under more pressure than ever this year, but that he thought it would take "at least three years" to turn the business around. "The City is very short term and he needs some time to do it."Leahy was CEO until 2011, since when the company's shares had fallen from above 400p to their current 290p as Clarke moved to cut losses at its US-based Fresh and Easy chain through a cut-price disposal.MacLaurin said: "When Terry left Tesco he had left a US business that was wasting huge amounts of money and an underinvested UK business. Of course, it is going to be tough for Philip. I know from experience how long it takes to turn the business around."Tesco has lost ground to discounters Aldi and Lidl, but Lord MacLaurin insisted that all its Big Four supermarket peers were feeling the pinch, which had led to the recent 'price war'."You've got to put this into context - Tesco is a huge business and the retail business is changing enormously. Everyone is suffering and trying to manage themselves through this period."It was recently predicted that Lidl will overtake Tesco to become Europe's biggest grocery retailer by 2018 as acceptance towards discounters grows across the continent.Retail consultancy Planet Retail has predicted that Lidl's owners, the privately owned Schwarz Group, which also operates through the Kaufland supermarket chain, will overtake Tesco and France's Carrefour to generate sales of €80bn (£65bn) by 2018. "This is an unprecedented power shift in European retail fuelled by the near unstoppable growth of the discount format," Planet Retail said.The consultancy sees discounters listing more branded products and stocking more fresh food in future, driving a structural shift in the way Europeans shop for food. "This readjustment will be permanent rather than a temporary blip."OH