British supermarket chain Tesco Plc. (TSCO.L,TSCDY.PK) Monday warned that first-half sales and trading profit are somewhat below expectations as the current trading conditions are more challenging than expected earlier. Following this, Philip Clarke, chief executive officer, decided to step down. Tesco shares are gaining around 3 percent in the morning trading in London.
The company also announced the appointment of Dave Lewis as Chief Executive Officer in succession to Philip Clarke, effective October 1. Clarke will step down from the Board on that date, but will continue to be available to support the transition until the end of January 2015. Clarke, who has been with Tesco over the last four decades, will also remain Chairman of joint venture with CRE in China until that date.
Lewis is currently Global President, Personal Care at Anglo-Dutch consumer goods giant Unilever Plc (UN,ULVR.L,UL). Lewis joined Unilever in 1987, and has held many roles. His last two roles were Chairman for Unilever in the UK and Ireland, and President for the Americas. He is currently a Non-Executive Director of British Sky Broadcasting Group Plc (BSY.L, BSYBY.PK).
On appointment, Lewis will receive a basic salary of 1.25 million pounds and standard benefits commensurate with his position. He will receive a sum of 525 thousand pounds in lieu of his current year cash bonus from Unilever.
Tesco in early July had announced the appointment of Alan Stewart as Chief Financial Officer, succeeding Laurie McIlwee.
Regarding its trading update, Tesco noted that trading conditions are more challenging than it projected at the time of first-quarter interim management statement. The lower-than-expected performance would reflect the weaker overall market as well as the impact of increasing investments it is making to improve the customer offer and to build long term loyalty.
"The outlook for the full year will be influenced by the extent to which benefits from the investments we are making begin to be seen; by conditions in the overall market; and by any steps that may be taken during the remainder of the year to improve our customer offer further," the company said in its statement.
In early June, the supermarket chain had reported decreased sales for the first quarter, as price reductions impacted near-term performance, amid the challenging consumer trends in the UK.
In London, Tesco shares are gaining 8.69 pence or 3.05 percent, and trading at 293.69 pence.
by RTT Staff Writer
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