New Tesco Chief Takes Over As Investor Cuts Stake In 'Risky' Retailer

New Tesco Chief's First Day Started Rather Awkwardly
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A customer leaves a Tesco Metro supermarket store, operated by Tesco Plc, in London, U.K., on Friday, Aug. 29, 2014. Tesco Plc unexpectedly slashed its dividend and reduced investment as the largest U.K. retailer was squeezed between German discount chains and upscale stores such as Waitrose, driving the stock to the lowest in almost 11 years. Photographer: Chris Ratcliffe/Bloomberg via Getty Images
Bloomberg via Getty Images

Tesco was left reeling today after a major investor slashed its stake in the troubled retailer just as Dave Lewis took over as its new chief executive.

The supermarket's share price fell 1.5% to 226.40p early this morning after the Sunday Telegraph reported that Harris Associates had sold nearly two thirds of its stake from around 3% to 1% of the business over concerns that it had become "too risky".

David Herro, chief executive of Harris Associates, said: “We want to hear a clear and coherent strategy about how to get this thing moving again."

Lewis joins the retail giant from Unilever, having started a month early after Tesco was forced only last week to issue another profit warning and slash its dividend to shareholders by 75%.

His predecessor, Philip Clarke, was forced to resign after the retailer revealed its worst trading figures in 40 years.

Lewis tried to set out some of his vision for Tesco in an interview with the Evening Standard today, pledging to offer a "fresh perspective".

Explaining why he took the job at Tesco, Lewis said: “I needed to find out for myself whether I can lead a whole business. Some people think that is crazy given some of the jobs I have done but actually I don’t think you know whether you can truly lead a business until you sit in that seat.”

He added: "Phil Clarke is a great retailer. The issue for Tesco is, is that what they need now? Because great retailing in that seat hasn’t been the thing that has worked, so they do need a fresh perspective.”

Six Reasons Tesco's Dominance May Be Finished
Tesco can't shrug off its poor performance(01 of06)
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Clarke blamed the dip in sales on cutting prices, moving away from vouchers and the disruption from refurbishing a large number of stores.However, Bernstein Research's Bruno Monteyne estimates that if you took out such costs, their like-for-like sales would still have dipped by 2%.
Tesco is trying too hard to appeal to everyone (02 of06)
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Discount retailers like Asda specialise in offering good deals, while fancy supermarkets like Waitrose are without equal at providing luxury. So Tesco is trying to be a mix of everything, other customers are lured away by more specialised rivals.
Others are doing what Tesco is trying, but better(03 of06)
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Tesco "has been increasing prices way too fast over the last few years to keep up earnings growth," Monteyne points out.As a result, compared to discount retailers like Asda, Tesco is at least 4% more expensive for shoppers.
1 million fewer customers are visiting a week(04 of06)
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The proof that Tesco is having some issues comes in the footfall, as the chain seems to have lost more than 1 million customer visits a week, worth £25 million in sales.
Tesco has never done this badly (05 of06)
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Clarke, who has worked for 40 years at Tesco, admitted: “I have never seen a quarter’s like-for-like sales like this before, that I can remember."Monteyne told Radio 5 Live the results were "the worst in their history."
Even Tesco's boss isn't confident (06 of06)
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“I see every day the improvements that are coming in the business, but I’m not making any promises about sales improving in the next few quarters," Clarke warned today. Meanwhile, other analysts like Julie Palmer at Begbies Traynor think Clarke "doesn't seem to have a clear turnaround strategy". He'll have to work hard to prove them wrong.