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Tesco bolsters board following £250 million profit probe Tesco bolsters board following £250 million profit probe
(about 3 hours later)
Tesco has strengthened its board with the appointment of two new non-executive directors with experience leading Compass and Ikea as it looks to rebuild its corporate reputation following its £250 million accounting black hole scandal. Tesco has strengthened its board with the appointment of two new non-executive directors as it looks to rebuild its corporate reputation following its £250 million accounting black hole scandal.
The retailer today said Richard Cousins and Mikael Ohlsson will join the board on 1 November. Former Ikea boss Mikael Ohlsson will be joined by the chief executive of catering firm Compass, Richard Cousins, in taking up non-executive directorships at Tesco next month.
Cousins is the chief executive of catering group Compass while Ohlsson was, until September last year, chief executive and president of Ikea Group. The appointments come after Tesco last month discovered a £250 million black hole in its profit forecasts, causing shares to plunge to an 11-year low. Shareholders responded enthusiastically to the recruits today and sent shares — which had dropped 25 per cent since the shock announcement — soaring 2.3 per cent to 176.15p.
Chairman Richard Broadbent said: "Mikael and Richard have been updated on and are wholly supportive of the steps being taken by the new management team to rebuild trust in Tesco and to focus all the resources of the business to deliver value to our customers.” Tesco has come under pressure over the amount of retail experience on its board since new chief executive Dave Lewis — a former Unilever director who admitted to The Independent last month that “I have never run a shop in my life” — took the helm. Chairman Richard Broadbent today praised the skills of the board’s newcomers, saying that Ohlsson and Cousins had “been updated on and are wholly supportive of the steps being taken by the new management team to rebuild trust in Tesco and to focus all the resources of the business to deliver value to our customers”.
New Tesco chief executive Dave Lewis is aiming to turnaround the grocer which has been hit by falling profits, the £250 million overstatement of profit forecasts and a price war with its rivals. Bernstein Research analyst Richard Clarke said: “Mikael Ohlsson’s appointment is a welcome one, his experience with a successful retailer is invaluable. It’s so different — you have so many products and staff to deal with and your customers are inside the business, in the shops.
It emerged this weekend that Lewis has ordered the sell off of five private jets owned by the retailer after the arrival of it’s a £31 million GulfStream 550 craft this weekend. “However, Ikea’s model is to roll out the same shop everywhere, where Tesco needs to move away from that and be more local.”
The move to sell the vehicles was one of Lewis’ first decision on arriving at Tesco, it is understood, and raises further questions over the leadership of former boss Philip Clarke. Shore Capital analyst Clive Black described the appointments as “particularly significant given the near-comical series of events that have materially tarnished Tesco’s reputation”. Black does not expect any strategic plan on a possible fund-raising  or investment to be revealed until  next year.
The jet was ordered in early 2013 when Tesco was scaling back its international operations.   Cousins’ appointment is a surprise after he stepped aside from the board of Strepsils and Dettol-maker Reckitt Benckiser in May to focus on the day-to-day running of Compass. Lewis — who this weekend said that Tesco would sell its five corporate jets after it took delivery of a £31 million Gulfstream G550 plane — is attempting to turn Tesco’s fortunes around.
The supermarket chain has been wounded by a price war with budget German chains Aldi and Lidl which has exacerbated problems in its shops that had already driven customers away.