Clarke: Tesco will be better off with only one captain

Tesco boss Philip Clarke has denied the grocery giant is in “crisis”, as the head of its UK operation quit sensationally this morning after just a year in the role and dire recent trading at its domestic business.

The resignation of Richard Brasher, who joined the supermarket in 1986, comes just two months after the group’s first profits warning in 20 years wiped nearly £5 billion off its shares.

It also follows the chain’s recent botched £500 million Big Price Drop campaign.

Brasher, a board member since 2004, had only last week unveiled a programme, alongside Prime Minister David Cameron, to create 20,000 UK jobs over the next two years by opening new stores and investing in existing ones, such as by adding more staff to improve customer service.

Clarke, who is to take control of running its UK business, said: “He [Brasher] felt that with my desire to get closer to the business to help with the pace and execution [of our plans], the business would benefit from giving me more space for that input.”

He added: “There is just not room for two captains in the same team.”

The exit of Brasher in July will pile the pressure on Clarke, who took the top job after the retirement of Sir Terry Leahy in March 2011. In addition to a series of board resignations since then, Tesco suffered its worst Christmas trading period in around two decades.

But Clarke said: “It is not a crisis. On the contrary, it has really come about because of the focus we are putting on the UK business.”

Brasher, who has stepped down from the board with immediate effect, is expected to receive the remainder of his one year’s pay-off when he leaves. He took home total pay of £2.26 million last year and has accrued a pension pot of £5.48 million, as well as holding more than four million shares and share options in Tesco.

A Tesco spokesman said: “Richard’s settlement will rightly reflect 25 years of outstanding service.”

Tesco had a 2.3% fall in its underlying UK sales over the six weeks to 7 January. This forced it to commit to invest up to £400 million in its UK stores this financial year and forecast only “minimal” growth in profits in 2012-13.

Despite its lacklustre UK performance, Tesco, which has operations in 14 countries, including China, the US and Turkey, is still expected to have delivered profits of £3.6 billion in the financial year just ended. Among other departures, Tesco’s chief executive of retailing services Andrew Higginson, the executive director of corporate and legal affairs Lucy Neville-Rolfe, and the head of its Asian operation David Potts, are set to leave by early next year. Shares in Tesco fell by 4.4p, or 1.4%, to 320.5p, making it one of the biggest fallers in the FTSE 100 this morning.

Upon unveiling the profit warning on 12 January, Clarke had strongly defended Brasher and its sizeable UK investment strategy. At the time, he said: “Richard and I see eye to eye completely on this.” The group chief executive poured cold water on calls from some quarters to bring back Tim Mason, chief executive of its US operation Fresh & Easy, to the UK. Clarke said: “He has got more than his hands full [in the US].”