Tesco's Brasher leaves: What next for the business?

Brasher will leave the company in July and has stepped down from the board with immediate effect.

Sources within the UK’s largest retailer have suggested tensions between group chief executive Philip Clarke and Richard Brasher have existed for some time.

It is believed Brasher’s attempts to come up with a new marketing plan following the Big Price Drop – dubbed the ‘Big Price Flop’ by the media – have been met with a cool response from Clarke.

After 25 years with the business, more than eight years on the board and a year as UK chief executive, Brasher will be disappointed to depart in such circumstances.

His achievements include forging the partnership with Dunnhumby and creating Clubcard, transforming the retailer’s non-food offer and developing international sourcing.

Just one of these hugely profitable developments would have been enough to see him elevated to the top job in smaller companies so it is to his credit that he pioneered them all.

But the fact remains, Tesco issued its first profit warning for 20 years due to problems on his patch: the UK.

He has been notably absent from the public eye since the profit warning in January, appearing briefly to allay criticism over its work experience programme and to unveil 20,000 new jobs over two years last week.

The spotlight has been very much on Philip Clarke to spell out what’s next for Tesco in the UK.

Veteran retail analyst Nick Bubb said: “It is not a good sign when the chief executive of a huge global group like Tesco tries to micro-manage the UK business.

“Given the rumoured tensions between the two of them over the scale of the price cuts in ’Price Drop’, Clarke ultimately had to back Brasher or sack him, but the cracks are showing and it is hard to see how this will end happily.”

And it is to Clarke that the focus now turns. He said he will now “assume responsibility as the chief executive of our UK business at this very important time”.

During this important time Clarke’s responsibilities also include selling off Tesco’s Japanese business, making its US arm Fresh & Easy profitable and developing its expanding Central European business among a multitude of other tasks.

Bubb questions the decision to take on the UK business. “Will Phil Clarke take over running Tesco Bank when that goes off plan? What happens if the UK doesn’t respond to all the investment being thrown at it?” says Bubb.

The internal Tesco memo is believed to have said: “There can only be one captain of the ship.”

Shore Capital analyst Clive Black, who believes Clarke should not take on the job full time, said: “Whilst we cannot fault Clarke for shouldering responsibility, demonstrating leadership and taking difficult decisions, we do hope that he can carry the burden of work of UK and group chief executive.

“As such, whilst we applaud Clarke’s focus and determination with respect to the core chain, and we believe that the market will too, we will also believe that this should not be a permanent position and that a UK chief executive should emerge in due course to allow the group to progress and for Clarke to fulfil his potential for the business in general.”

Following the departure of Sir Terry Leahy last year, Clarke revealed a new management structure by introducing regional chief executives across the globe and a UK management board. There have now been five departures from that board – including revered online boss Laura Wade-Geary.

Clarke has been working since January to devise a plan to turnaround Tesco’s fortunes in the UK which will include investing £300-£400m in refreshing tired stores, introducing teams dedicated to fresh produce and beauty counters.

Black adds: “It is clear that the company has seemingly compounded the broader pressures by perhaps losing touch with its customers through initiatives that have seemingly sought to protect margins by cost management over sales expansion at a time when the competition has stepped up to the mark.”

The focus now turns on Tesco’s preliminary results on the April 18 for Clarke to reveal his masterplan.