FORMER Tesco chairman Lord MacLaurin of Knebworth has lamented the "sad legacy" of former chief executive Sir Terry Leahy, as he told shareholders that new boss Philip Clarke needs to be given time to turn it around.
Tesco, the UK's biggest grocery chain, saw profits more than halve in the year to February as it wrote £804m off its bloated landbank and called a halt toits £1 billion attempt to break in the United States with its Fresh & Easy chain.
Lord MacLaurin oversaw the supermarket giant as chairman from 1985 to 1997, departing just months after Sir Terry took the helm as chief executive.
He told Tesco's annual shareholder meeting in at the Queen Elizabeth II conference centre in London: "When you judge the performance of a chief executive you do not only judge the performance of his day-to-day operation but you also have to judge his legacy. I think we are all very sad in this hall to see the legacy that Terry Leahy left."
Speaking from the floor, Lord MacLaurin called on Tesco's board and its institutional investors to give Mr Clarke time to sort out the company which includes a £1bn turnaround of its core UK business.
"This is not going to happen overnight. This job is going to be two or three years," he said.
"If you look back at the 1990s when Sainsbury's was going through a similar job to us, it took them five or six years to turn around."
Tesco's chairman Sir Richard Broadbent said the board had not taken lightly recent decisions to abandon plans to develop 100 sites plans and halt its US expansion.
"Crucially it is these decisions that have liberated the business from a treadmill of seeking to squeeze out increments of short-term growth and to focus on long term value creation," he said.
Asked about the lessons management had learned from the US, Sir Richard said: "It is a good idea to pilot ideas before you roll them out on a large scale."
He added that it is also important that there is an "an environment and respect" in the boardroom.
Mr Clarke said critical moments in the retailer's 94-year history including Sir Jack Cohen's opening of self-service supermarkets in the 1940s, Lord MacLaurin's development of out-of-town supermarkets in the 1980s and Sir Terry's decision to pursue overseas growth.
"We are at another such one," he said. "We have been clear from the start that the space race in the UK had to end."
Mr Clarke said that the size of Tesco stores is falling with a planned 120,000 square foot outlet at Sunderland being reduced to 70,000 and a gymnasium built in the remaining space.
It was reported yesterday that Sports Direct, which has a merchandising deal with Rangers Football Club, is in talks with Tesco about taking space in its supermarkets.
The sportswear retailer, run by Mike Ashley, could take on the mezzanine floors in three of Tesco's British hypermarkets and also plans to occupy space next to supermarkets or in nearby retail parks.
Mr Clarke denied shareholder concerns that Tesco is to blame for the disappearance of independent stores from the high street.
Tesco avoided a rebellion from investors over executive pay at yesterday's meeting.
Some 95.2% of shareholders backed the company's executive pay report, even though advisory group Pensions Investment Research Consultants had called on investors to vote against it due to what it regarded as excessive pay-offs to two executives.
Tesco paid Tim Mason, the former boss of Fresh & Easy £1.68m, and Richard Brasher, ex-head of its UK business £1.3m.
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