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UK: Tesco’s Finance Chief Poised To Step Down

Tesco’s Finance Director Laurie McIlwee is reportedly set to resign as early as next week, days before the supermarket is expected to announce another sharp fall in profits. . 

The company has declined to comment on the story circulating in the press, which has been speculated at over recent months, although analysts said the growing clamour could drive McIlwee to resign. “There’s clearly some people out to get him,” one executive said.

If McIlwee did resign next week it would create a major headache for Chief Executive Philip Clarke who is due to report another set of disappointing results on 16 April. Analysts expect the group to announce a further 10% fall in annual profits as it continues to struggle to compete with discounters like Lidl and Aldi. This comes after it last year reported its first annual profits fall in nearly 20 years.

Tesco has lost a string of top executives since Clarke’s promotion to Chief Executive in March 2011. Tim Mason, who headed the failed US launch, Richard Brasher, UK chief, David Potts, head of Asia and Andrew Higginson, who led the Tesco Bank, have all left.

Some analysts say that is not surprising, given that Clarke has been wrestling with the legacy of his predecessor Sir Terry Leahy’s over-expansion abroad and lack of investment at home. Clarke has been left with a string of underperforming businesses.

It has been widely reported that Clarke and McIlwee have clashed on key areas of strategy, a charge that was repeated in the Financial Times last night, citing two sources, although this was denied by one senior executive at the company who said the pair were remained on good terms.

However, others say the departure of such a key executive as his Finance Firector would leave the management team dangerously thin. Shares are at their lowest level for nearly a decade and investors are impatient at the group’s seeming inability to stem the sales decline in its core domestic business.

McIlwee has been at Tesco for 15 years, the last five as Finance Director. He became the focus of investor disquiet in October after Tesco shocked investors by reporting a collapse in profits at its central European unit, which he had failed to signal. This prompted some institutions to question whether senior management were in full control of the group’s finances.

Reports last month said the company had been considering McIlwee’s position since a February investor presentation when it scrapped one of its key profit margin targets to enable it to compete more rigorously on price.

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