FILE PHOTO: Philip Clarke, chief executive officer of Tesco Plc, holds one of the company's new Hudl tablet devices as he arrives for its launch in London, United Kingdom, on Monday, Sept. 23, 2013. Tesco Plc named Unilever executive Dave Lewis as Chief Executive Officer, replacing Clarke, and said that first-half results at the biggest U.K. grocer were below expectations. Photographer: Simon Dawson/Bloomberg *** Local Caption *** Philip Clarke
Philip Clarke said earlier this year that he might only have a few years as chief executive

Philip Clarke was due to celebrate 40 years at Tesco with a swanky party on Tuesday thrown by the retailer’s chairman, Sir Richard Broadbent.

But on Monday, he was suddenly replaced by Dave Lewis, head of Unilever’s personal care business. The party, which had been due to take place at the Victoria & Albert museum, has been cancelled.

The scale of the challenge facing Mr Clarke was clear back in April 2011, when he made his first appearance as chief executive after succeeding Sir Terry Leahy.

Mr Clarke praised the “fantastic legacy” he had inherited from Sir Terry, who had built a huge reputation as a retailer after successfully running Tesco for 14 years.

But part of that legacy was slowing sales in its home market and the mounting costs of an ambitious push into the US with the Fresh & Easy chain – Sir Terry’s last grand project.

The incoming chief executive set out plans to overhaul Tesco’s UK business at that first meeting. But despite the retailer racking up hundreds of millions of pounds in losses from its US business, Mr Clarke said he would persevere with Fresh & Easy, revamping stores and installing features such as bakeries and fresh coffee. He eventually announced a review of the US business in December 2012.

Mr Clarke’s second big announcement as chief executive was in October 2011, when he unveiled a plan to cut prices, known as The Big Price Drop. But despite some analysts – such as Dave McCarthy, now at HSBC – calling for Tesco to “go nuclear” and stop rivals in their tracks, it did not go far enough.

The company’s rivals retaliated – this was blamed for Tesco’s first profit warning in 20 years, in January 2012. Tesco’s prices, particularly compared with German discounters Aldi and Lidl, continued to be a problem.

In February this year, Tesco announced a further £200m of cuts. But some investors and analysts said this round also did not go far enough. Indeed, while Mr Clarke focused on areas such as the Hudl tablet, and introducing the Giraffe restaurant and Harris + Hoole coffee chain into stores, he probably underestimated the power of Aldi and Lidl.

He described the discounters as “niche” and said they were winning share from a small base.

Finally, Mr Clarke parted company with the cadre of senior managers who had run Tesco under Sir Terry. In April, the Financial Times revealed that Laurie McIlwee, finance director, had resigned, leaving Mr Clarke as the only executive director on the board.

Mr Clarke and his supporters blame the condition of the business when he took over from Sir Terry.

However, one analyst says: “When he took over, Tesco was on the slide …but he made a bad problem worse.”

Clive Black, analyst at Shore Capital, says Mr Clarke simply had no lucky breaks. “In some respects, anything that could go wrong did go wrong for Philip,” he says.

Mr Clarke, the son of a Tesco store manager who began stacking shelves at the chain aged 14, was happiest in stores, with information technology, and travelling to the group’s operations around the world. However, some critics have suggested that he lacked the strategic insight of Sir Terry. The succession of management changes also made him a divisive figure within the company.

Mr Clarke, who like Sir Terry hails from Liverpool, told a conference earlier this year that he might only have a few years as chief executive.

Asked whether he had been given a deadline to turn the company round, he said: “I’m not a young man. I’m 54 years of age. I have given it 40 years. My job is to carry on doing this job until I’m ready to hand it over to someone.”

The handover has come sooner than expected.

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