Tesco has named John Allan, chairman of the housebuilder Barratt Developments and the card-processor Worldpay, as its new chairman, completing a sweeping overhaul at the top of Britain’s biggest retailer.
The troubled supermarket said Allan, 66, would take over from Sir Richard Broadbent on 1 March, after a year that has also seen the exit of the former finance director, Laurie McIlwee, chief executive, Philip Clarke, and head of UK operations, Chris Bush, and the emergence of a £263m accounting scandal.
Allan, who will be paid £650,000 a year, brings experience of food retail to Tesco’s board, albeit from 30 years ago when he was head of marketing, buying and store operations at Fine Fare, a now-defunct supermarket chain.
Tesco’s new chief executive, Dave Lewis, has never run a retailer before, having spent 27 years at the consumer goods company Unilever. Matt Davies, the recently hired head of Tesco’s UK business, has spent his career at bicycle and car parts store Halfords and Pets at Home.
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Analysts said there was some disappointment that Tesco had not been able to find a chairman with more up-to-date experience of food retail. Shareholders were thought to be keen on Archie Norman for the top job – the ITV chairman who led the turnaround of Asda in the late 1990s and is on the board of the Australian grocer Coles.
Tesco held talks with Norman, who is thought to have turned the job down because of his other commitments, as well as Ian Cheshire, the former chief executive of B&Q owner Kingfisher, who decided he wanted a chief executive role.
Allan said: “I’m very pleased to be taking on this role at such a critical moment for the business.”
Clive Black, a retail analyst at Shore Capital, said: “A proper win-win would have been someone like Archie Norman who has been in a turnaround and known the industry for years. Investors would have taken comfort from that. But whoever is chairman at Tesco needs to support Dave Lewis and the board has decided the best person is Allan.”
Patrick Cescau, Tesco’s senior independent director who has played a key role in restructuring the retailer’s board in recent months, said Allan had been appointed following a “deep and thorough process” and the board had unanimously agreed he was the right candidate.
The former Dixons chairman will need to draw on all his skills as Tesco undergoes a massive overhaul with plans to close 43 stores, scrap 49 new developments and cut up to 9,000 jobs across its head office and shops.
Broadbent announced in October he would be stepping down after a disastrous three-year tenure in which sales and profits fell and the company had to admit it had overstated profits by £263m. The matter is currently being investigated by the Serious Fraud Office, the Financial Reporting Council and the grocery market watchdog.
Broadbent said on Tuesday that Allan’s “wide expertise, his experience and his personal qualities will contribute greatly to the future of the group”.
For the majority of his career Allan has been involved in distribution businesses, heading up the freight company Ocean Group, which merged with its rival NFC to become Exel, which was acquired by Deutsche Post in 2005. He stood down as chief financial officer of Deutsche Post in 2009, returning from Germany to the UK to become chairman of Dixons, overseeing a turnaround at the electricals group under John Browett and then Seb James. He stepped down to deputy chairman when it merged with Carphone Warehouse last year.
Allan is quitting his role at Dixons Carphone and as a non-executive director of Royal Mail and senior adviser to the consultancy Alix Partners. He has agreed to step down as chairman of DHL once a successor is found but will continue as chairman of Barratts and WorldPay for the foreseeable future.
Allan has previously said that his role model is Sir John Parker, currently chairman of Anglo American, with whom he worked on the board of National Grid. “He is very organised, thoughtful and very good at ensuring the whole board gets an opportunity to contribute to discussions,” Allan said.
Fran Minogue, managing partner at the retail executive search specialist Clarity, said Allan was well suited to the Tesco job: “He has excellent experience as a retail chairman at a company undergoing a turnaround and is well regarded in the City. He is astute, measured and calm, and knows how to bring people together and focus them.”
Seb James of Dixons paid tribute to Allan, saying he had been “a force for good” at the newly merged Dixons Carphone. “Allan has been an excellent chairman to Dixons Retail for many years, playing an important part in a great turnaround story,” he said.
Date: February 17, 2015