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Tesco, the British retailer that has gone from flying high with global expansion plans to a series of quarters in which sales and profits have been below expectations, announced this morning that embattled CEO Philip Clarke is leaving the company. He will be replaced by Dave Lewis, the current president of personal care at Unilever.

It is the first time that Tesco has gone outside the company for a CEO, the BBC reports.

In a prepared statement, Clarke said,"Having taken the business through the huge challenges of the last few years, I think this is the right moment to hand over responsibility."

And chairman Richard Broadbent said: "Philip Clarke agreed with the board that this is the appropriate moment to hand over to a new leader with fresh perspectives and a new profile … Dave Lewis brings a wealth of international consumer experience and expertise in change management, business strategy, brand management and customer development. He is already known to many people inside Tesco, having worked with the business over many years in his roles at Unilever."

The announcement came as Tesco said that first half results would be disappointing because of market conditions that were more challenging than expected.

The Wall Street Journal reports this morning that "Mr. Clarke has been CEO since March 2011, during which time he has issued Tesco's first profit warning in nearly two decades, pulled out of operations in Japan and the U.S. and suffered the departure of many top-level executives.

"Tesco's plan to revive its performance in the U.K. at first centered on improving stores and customer service, but more recently Mr. Clarke has opted to invest in reducing prices of everyday products to compete with discount chains. Pressure built on Mr. Clarke as trading remained weak, and the executive received a frosty reception from investors at the retailer's annual shareholder meeting late last month."
KC's View:
From everything I've been told, there are real morale problems at Tesco, and Clarke no longer had the confidence of his troops … which made his eventual departure likely. At the same time, the company's continuing problems - and his apparent inability to fix them - meant that he'd also lost the confidence of investors. That made his immediate departure inevitable.

That said, I think in all fairness it has to be pointed out that he didn't build the leaky boat that Tesco became all by himself. Sir Terry Leahy, his immediate predecessor, created a lot of the messy scenarios that Clarke found so difficult to clean up. Putting all the blame on Clarke doesn't seem quite fair.

I kind of feel a little sorry for Clarke. His predecessor, Leahy, was made a knight. Leahy's predecessor, Ian MacLaurin, was made a knight and then a Lord. But I don't think Clarke should be planning on receiving similar honors anytime soon.