Tesco has bolstered its board with the appointment of the former Ikea chief and the chief executive of Compass as non-executive directors.
The composition of the supermarket’s board has been criticised after a series of profit warnings and last month’s revelation that expected first-half profits had been overstated by £250m.
The recruitment of Mikael Ohlsson, who ran Ikea until a year ago, and Richard Cousins, who has led Compass since 2006, was welcomed by analysts because the existing group of non-executive directors, which include former bankers and civil servants, has no frontline retail experience. Lewis, who spent 27 years at Unilever, the maker of Dove and Lynx, previously admitted: “I have never run a shop in my life.”
Tesco shares closed up nearly 3% at 176.75p. They had previously fallen every day since the accounting scandal was announced.
The appointments bring to 11 the number of non-executive directors, including the chairman, with just two executives, Lewis and the finance director Alan Stewart. This has led to speculation that some of the longer-serving members, such as Ken Hanna, who chairs the audit committee, will step down.
The chairman, Sir Richard Broadbent, is under pressure to show he is the right person to lead the board. He poached Lewis from Unilever to overhaul the company but the accounting scandal came to light when Lewis was less than three weeks into the job. “Mikael and Richard have been updated on, and are wholly supportive of, the steps being taken by the new management team to rebuild trust in Tesco and to focus all the resources of the business to deliver value to our customers,” he said.
On Ohlsson’s watch, the notoriously secretive flat-pack firm Ikea became more open and published details of its financial performance for the first time. He led the group for four years but was replaced a year ago by Peter Agnefjall, a close associate of Ikea’s billionaire founder, Ingvar Kamprad. Cousins has experience of dealing with troubled companies, having cleaned up Compass after the caterer was embroiled in a UN bribery scandal.
Retail analyst Richard Hyman said Tesco needed to bring in more retail experts. “One retailer on the main board is not enough when their problems are retail ones,” he said. “When it comes to non-executive directors, it’s about quality and relevance not quantity.”
The Financial Conduct Authority, the City regulator, is investigating the profit overstatement, which was caused by the optimistic recording of revenues from suppliers. Analysts have said directors with a retail background would have been more aware of the possibility of overstating commercial revenues.
Clive Black, a retail analyst at Shore Capital, said the appointments were “a light beam of good news from Tesco in a sea of darkness” after events that, he said, bordered on comical. “Both gentlemen are expert in their field, highly regarded by investors and bring much-needed international consumer market experience to the fold. Non-executive directors rarely put pennies into the tills but, in this instance, we welcome the joint appointments and hope that it represents the recommencement of more effective governance of Tesco.”
Ohlsson and Cousins will each be paid a basic fee of £70,000. The latter’s decision to join the embattled grocer is a surprise as he relinquished his non-executive role at Reckitt Benckiser in May, stating that he did not have enough time for the extra duties.
