Leahy departed Tesco prematurely

Despite the well-earned plaudits following his departure last year there is an argument that Sir Terry Leahy, former chief executive of Tesco, was put under pressure to leave earlier than expected.

The exit came at least two years earlier than originally planned as a result of the failure of a number of strands of his strategy, according to a City analyst who remains bearish on Tesco.

He suggests Leahy would not have chosen that time to leave because the US was still failing badly, the UK was also performing weakly, and some important aspects of the much-vaunted Retail Services division was in its formative stages.

The US Fresh & Easy business was originally heralded as the ‘second engine of growth’ at the time of its much-trumpeted launch but it was still underperforming badly when Leahy left – thereby leaving its fate in the hands of new CEO Philip Clarke.

And in the UK, Leahy left without having time to stablise this core part of the Tesco business – despite leveraging double and triple Clubcard points and pushing suppliers to be its chosen partner for launching new products.

The long-standing arrangement had been that Tesco chairman David Reid would leave the Tesco board first and following the appoinment of a replacement Leahy would then follow two years down the line.

However, the issue of the failure of some core aspects of the Tesco strategy may have prompted some disagreements internally, as well as with major investors, which was sufficient for a re-assessment of the departures timetable.

Whatever ultimately happened behind those board room doors Clarke is still very much grappling with the headaches that Leahy faced and it does not look like he has yet found all the answers.