Tesco UK CEO to quit amid Profit Warning

Tesco PLC (TSCO.LN) Thursday confirmed that Richard Brasher, chief executive of its U.K. operations, will step down from the board immediately and leave the company in July, barely a year into the job during which time the retailer issued its first profit warning in 20 years.

Several years of falling sales in the U.K. and a particularly dire Christmas period prompted the group to warn in January that it will make minimal profit in 2013. It plans to invest millions of pounds to turn around its U.K. business by improving service and lowering prices to lure back customers who have deserted the largest supermarket chain for its nimbler rivals.

Chief Executive Philip Clarke will take on the U.K. role in addition to his current responsibilities.

“I have decided to assume responsibility as the CEO of our U.K. business at this very important time,” Clarke said. “This greater focus will allow me to oversee the improvements that are so important for customers.”

“The depth of management at Tesco and the strong leadership team across the Group allow me to take a more active role in the U.K. whilst our other businesses continue to grow,” he added.

Brasher, a long-time executive who joined Tesco in 1986, was appointed U.K. and Republic of Ireland chief executive in March 2011 when Clarke took over from Terry Leahy.

He was a key architect of Tesco’s Big Price Drop, a major price cutting campaign launched in October last year to reinvigorate U.K. sales that prompted wide scale price cuts across the grocery industry but has so far failed to reverse the decline at Tesco.

Tesco reported a 2.3% decline in U.K. same-store sales in the six weeks to Jan. 7, excluding VAT and fuel, a deterioration on third quarter sales which fell 0.9% from a year earlier. Its market share fell to its lowest level since May 2005, dropping to 29.7% in the 12 weeks ended Feb. 19, down from 30.3% in the 12 weeks ended Feb. 20, 2011, according to the latest data from Kantar, which monitors the grocery purchasing habits in U.K. households.

It announced a program of 20,000 new jobs last week to help improve service in the U.K. but also became embroiled in a controversial public backlash at a U.K. government work experience scheme.