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Tesco CEO Philip Clarke: Richard Brasher ‘decided to step aside so I can get closer’

Tesco chief executive Philip Clarke has tightened his grip on the retail giant after Richard Brasher, head of its ailing UK business, today fell on his own sword after only a year in the job.

Analysts said Mr Brasher had been under pressure for several months after failing to revive sales in the UK, which still accounts for two-thirds of Tesco's business.

Mr Clarke will take charge of the flagging UK operation in addition to his duties as group chief executive.

Two months ago, Tesco was forced to issue its first profit warning in 20 years and industry data shows the retailer is currently sitting on its lowest market share since 2005 despite initiatives such as the £500m "Big Price Drop" campaign.

Rumours have been circulating the City for several months about a disagreement between Mr Brasher and Mr Clarke over strategy.

But Mr Clarke today put the development down to his own decision to play a greater role in the UK business.

"He [Richard] has decided to step aside so I can get closer," Mr Clarke told The Daily Telegraph. "There can't be two captains on the pitch.

"The guy has given his all. It's just a matter of circumstances."

He also insisted that Mr Brasher's departure was not a precursor to another profit warning.

Mr Brasher, who joined Tesco in 1986, did not return calls for comment but sources said he was left with nowhere to go after Mr Clarke told him he would take control of the UK stores.

A spokesman for Tesco said Mr Brasher would not receive a pay-off but would be rewarded "in line with his contractual obligations" when he departs in July.

Mr Brasher was put in charge of the UK business by former chief executive Sir Terry Leahy before he handed over to Mr Clarke in March last year.

However, the UK boss's focus on slashing prices is believed to have clashed with Mr Clarke's plans to rejuvenate stores in this country by offering better customer service.

Mr Clarke's greater involvement in the UK business will mirror the previous governance structure under Sir Terry, who ran both the UK operation and the wider group.

But analysts warned the arrangement was unsustainable in the long-term. Chris Bush, the former head of Tesco's Thailand business who was last month appointed UK chief operating officer, was named as a possible successor to Mr Brasher.

Tesco insiders said Ken Towle, who has moved back from China to run Tesco's UK online operation, will also play a critical role in reviving the UK division.

It is expected the retailer could spend up to £800m over the next two years revamping stores amid criticism that cost-cutting has come at the expense of customer experience.

Mr Brasher's resignation is the third board-level departure since Mr Clarke's promotion to chief executive 12 months ago.

Andrew Higginson, former head of Tesco's retailing services division and David Potts, chief executive of the Asian business, both left last year.

Executive director Lucy Neville-Rolfe is expected to step down later this year.

Clive Black, analyst with Shore Capital, said he was not "overly surprised" by Mr Brasher's departure given the problems in the UK business.

"Quite how that new management structure works and performs is yet to be measured, but we certainly cannot fault Mr Clarke for demonstrating decisiveness and energy," Mr Black added.

Source : Nathalie Thomas – The Telegraph

15 March 2012
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