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Tesco working on middle management restructure

Tesco is working on a middle management shake-up that could lead to roles being cut, as Britain’s biggest retailer battles to turn round its domestic business.

Tesco last summer made sweeping changes among its senior and middle managers, making 50 redundant.

The latest shake-up would complete this process, according to people familiar with the situation, with a restructuring below senior management level. The process is also expected to remove some duplication between central and local country functions, following an overhaul of how Tesco was organised after Philip Clarke became chief executive three years ago.

The latest restructuring is expected to affect roles at Tesco’s head office in Cheshunt, and its office at Welwyn Garden City, which houses Tesco’s non-food operations, such as its F&F clothing range.

Some cuts to roles could not be ruled out, according to people familiar with the situation. However, they could not put a figure on any potential reduction at this stage, and also stressed that it was possible that some teams, such as those related to Tesco’s multi-channel operations, could expand.
Tesco declined to comment.

The shake-up reflects Tesco’s transition, under Mr Clarke, from a retailer primarily focused on physical stores, to a multi-channel group, as it strives to improve sales in its domestic market after its profit warning two years ago.

Mr Clarke has indicated in the past that this shift will require a change in skills among leaders and broader management across the group.

The shake-up also comes ahead of Tesco’s year-end at the end of February, and amid concerns that trade has been tough over the past few weeks, according to people familiar with the situation.

Figures from Kantar Worldpanel, the consumer research group, showed that Tesco’s sales weakened in the four weeks to February 2, in line with a broader slowdown in the market.

Tesco’s sales fell by 0.8 per cent in the four weeks to February 2, compared with a 0.3 per cent fall in the four weeks to January 5.

However, the biggest sales decline came at Wm Morrison, where sales fell by 4 per cent in the four weeks to February 2, compared with a 2.9 per cent decline in the four weeks to January 5.
According to Kantar Worldpanel, the market slowed from 3.1 per cent growth in the four weeks to January 5 to a 1.6 per cent expansion in the four weeks to February 2.

Clive Black, analyst at Shore Capital, said: “We are most concerned about Morrison’s position, albeit we are mildly worried about the trading momentum of Tesco UK too and so the robustness of our forecasts, particularly as it is now trading against what could be construed as a more favourable comparative for part of the period due to the impact of the horsemeat adulteration in January 2013.”

Shares in Tesco closed 1.5 per cent lower at 318.7p on Tuesday.

Source : Andrea Felsted - Financial Times

12 February 2014
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