The board of one of Britain's top companies is in disarray. The finance director of Tesco, the supermarket retailer, is to step down and no replacement has been named. He is not the first departure from Chief Executive Phil Clarke's top team. The chairman, Richard Broadbent, needs to get a grip on the situation.
The reason behind Laurie McIlwee's exit is not clear. The company's shock announcement in October that its Eastern European business was doing worse than thought certainly damaged investor relations, but chief financial officers have endured worse than that. And, Tesco's sagging share price has not been caused primarily by its style of communications. Operational performance has deteriorated amid intensifying competition, particularly from the discount retailers.
McIlwee follows five other executives out of the Tesco boardroom since Terry Leahy vacated the CEO slot in 2011. There's always likely to be some upheaval when a CEO's baton passes. And under Leahy, Tesco might have had too many executives. But it is strange that so many have gone and none has been replaced at the same level. The absence of boardroom executives hampers succession planning.
Tesco is also struggling to find convincing answers to some difficult strategic questions. In the past 18 months or so, it has responded to problems in the international businesses by shuttering its Fresh 'n' Easy US business. It put £1 billion aside for investment in its UK stores. And it has said it will cut prices to counter the competition brought by upstarts such as Aldi and Lidl.
The situation needs to be stabilised urgently. Tesco had 72 billion pounds of sales last year. Clarke cannot run this business on his own. Broadbent would be ill advised to undermine him by seeking to replace him at this point. There is no one else to run the company. The priority is to refresh the executive cadre with both internal and external talent.
