PRICE WAR HELPS BRING DOWN CLARKE
Philip Clarke was brought down by a combination of the current supermarket price war and the move by customers away from large out-of-town sites towards high street outlets and online shopping.
Major supermarkets have seen their market shares slip in the face of competition from discounters such as Aldi and Lidl, with Tesco and Morrisons suffering the steepest falls.
Shares were up by around 2% today in a sign of how much investors had lost faith with Mr Clarke's policy of upgrading its big stores and online offering without taking the discounters head on.
Shareholders will hope that his replacement Dave Lewis, who joins from Unilever on October 1, will get the business back on track.
Phil Dorrell, director of consultancy Retail Remedy, said: "Philip Clarke leaving is the right thing for Tesco. His strategy wasn't working and, for some time, the UK's biggest grocer has been drifting aimlessly."
Profits for the year to February 22 this year were down for the second year in succession. And last month, till-roll figures from Kantar Worldpanel showed a decline in Tesco's market share to 29% in the 12 weeks to May 25, compared with 30.5% a year earlier.
A day later, Mr Clarke unveiled a 3.7% like-for-like sales decline for the first quarter to May 24, the third quarter in a row of worsening falls. At the time Mr Clarke insisted that he was "not going anywhere" despite the poor sales figures.
Mr Clarke succeeded Sir Terry Leahy as chief executive in February 2011, but at the start of the following year Tesco shocked the market with its first profit warning in almost 20 years after poor Christmas trading.
Sir Terry had expanded the business greatly under his 14 years in charge, including its launch into a number of international markets such as the US, which the firm pulled out of in 2013 accompanied by a £1.2 billion charge.
Independent retail analyst Nick Bubb said: "We've always thought that Phil Clarke was a street-fighter, and his inheritance from the once highly regarded Terry Leahy was very poor - with the core UK business milked dry to finance the foolish escapade in the US - but he was always going to find it hard to survive another profit warning."
Mr Clarke unveiled a £1 billion revival plan in April 2012, which included store upgrades, the recruitment of more staff and limited price cuts.
The initiative followed complaints that its 2,800 UK stores were cold, industrial and suffered from poor levels of staff service.
In February 2014 the supermarket promised to spend an additional £200 million on lower prices for basic products, such as carrots, tomatoes, onions, peppers and cucumbers.
It also said it would also rein in annual capital spending to no more than £2.5 billion for at least the next three years as a result of the dramatic reduction in store expansion - nearly half the £4.7 billion spent in 2008/09.
This was an admission that Tesco's days of dominating rivals by building more retail space was over.
At the firm's annual meeting last month Mr Clarke said the firm had revamped half of the 650 large UK stores, by adding bakeries, Harris + Hoole coffee shops and Giraffe restaurant chains.
But by now major shareholders were concerned that sales, profits and market share still continued to slide.
Shore Capital analyst Clive Black said "recent trading in the UK has been rock bottom, like-for-like sales down by plus 5%, not seen in our long coverage of the stock."
Mr Black, along with a number of analysts, argued that prices at Tesco have not been "competitive enough in its home market".
All eyes will now turn toward Mr Lewis, who joins Tesco from his role as president of Unilever's personal care division - which produces brands such as Lynx, Dove, Sure and Pond's.
Tesco points out that since Mr Lewis joined Unilever in 1987 he has been responsible for a number of business turnarounds during his career, in a variety of roles at the firm.
Mr Bubb added: "Dave Lewis knows nothing about retailing, but maybe that doesn't matter, because as a leading supplier he certainly knows how to win price wars and perhaps that is the big issue now facing Tesco in the UK."
Clive Black said: "We await Mr Lewis' prognosis for the business, particularly the UK, with considerable interest. We believe that his appointment will be greeted with a great sense of encouragement by a store staff that has been pummelled in recent years so leading to a collapse in morale."
