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WALTHAM CROSS, England — Tesco chief executive officer Dave Lewis has assumed control of the company’s struggling U.K. supermarket business.
Tesco chief executive officer Dave Lewis has assumed control of the company’s struggling U.K. supermarket business.
The move was announced at the beginning of December as part of an ongoing shake-up of senior management at the United Kingdom’s largest grocery chain. Eight managers were suspended in September following an accounting scandal. One of the suspended managers, food sourcing director Matt Simister, was welcomed back this month as part of Lewis’ new leadership team. Tesco noted that Simister was cleared by an internal investigation into how the chain had misstated its first half profit by about $423 million. A regulator, the Financial Conduct Authority, is also investigating the shortfall.
Tesco acknowledged the shortfall in late September, shortly after Lewis had taken the job of Tesco’s CEO.
Lewis, hired from consumer products company Unilever, originally planned to join Tesco on October 1 but was brought aboard a month early to deal with the accounting fallout and stem the slide in Tesco’s share of the U.K. grocery market, down to 28.8% this year from 30.1% in 2013, according to Kantar Worldpanel.
Tesco issued profit warnings on four occasions this year, helping send the stock to an 11-year low and making Tesco at one point the worst performer on London’s FTSE 100 stock index. Things were sufficiently bad that in October revered investor Warren Buffett characterized his confidence in Tesco as "a huge mistake."
Buffett first bought into Tesco in 2006, when the company was expanding rapidly in the United Kingdom and elsewhere and was planning to open a new Fresh & Easy chain in the United States. Buffett continued to add to his position as others were selling on profit warnings, and in 2012 he owned 5% of the company. CNBC reported that Buffett has since pared back his Tesco stake to 3%.
