It is considered right and proper for former corporate bosses to stay politely neutral on the performance of their successors, and until now Sir Terry Leahy has done just that. In a 'hush-hush' conference call with investors organised by Bank of America Merrill Lynch and reported by the Sunday Times, however, Tesco’s old master broke with decorum.
Leahy said Tesco had ‘focused too much on what it isn’t rather than remembering what it is and working with that’ since he left the helm. ‘What it is,’ he said, ‘is a very big brand in the centre of the market, and clearly if you’re weak in the centre you can get attacked from all sides.’
Essentially, then, Leahy has deduced that Philip Clarke got it wrong. Sherlock Holmes would be amazed. Of course, Leahy wasn’t going to defend Clarke’s record, given that if Clarke’s strategy wasn’t at fault, then it must have been his own.
That is not an outrageous suggestion. After all, Leahy’s own predecessor Lord MacLaurin last year attacked his decisions to pursue expansion into the US at the cost of investment in the British business, saying he handed Philip Clarke a ‘hospital pass’ upon leaving. Looks like breaking polite precedent isn’t so unusual at Tesco after all.
Leary did seem to have more positive things to say about the current management, saying Dave Lewis had ‘emphasised the need to focus on customers’, and that we could be surprised how quickly things improve at Tesco. ‘It’s very responsive to the right leadership and the right marketing strategy,’ Leahy said - an interesting statement in light of recent speculation that he could be parachuted in as the next chairman.
Tesco’s recent dire fortunes certainly haven’t reversed yet. To add to its SFO investigation over the £263m black hole in its accounts and the exodus from its board, the firm also faces a possible downgrade of its debt rating to dreaded junk status, according to ratings agency Moody’s, which already took it down another notch last Thursday.
It is perhaps not a surprise, then, that the company is apparently considering selling Tesco Bank for up to £1bn, according to the Telegraph. It remains to be seen whether such a windfall, or indeed Lewis’ strategy, can justify Leahy’s optimism about the firm’s future, or whether Leahy can escape the scandal with his own strong reputation untarnished.