Tesco beefs up board with consumer experts

Tesco has hired the former boss of Ikea and the chief executive of Compass as directors to strengthen a board accused of lacking the experience to oversee Britain’s biggest retailer.

Mikael Ohlsson, chief executive of Ikea until September 2013, and Richard Cousins, who has headed Compass, the catering group, since 2006, will join on 1 November as non-executive directors.

An accounting scandal and a series of profit warnings have exposed weaknesses in the group’s board. Until the new appointments, the team of non-executive directors, which include former bankers and civil servants, had no frontline retail experience.

Sir Richard Broadbent, the chairman, is under pressure after Tesco revealed two weeks ago that it had overstated expected first-half profits by £250m. He hired Dave Lewis as chief executive from Unilever to overhaul the company but Lewis was alerted to the accounting scandal after less than three weeks in the job.

The Financial Conduct Authority is investigating the profit overstatement, which was caused by overoptimistic 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.

Broadbent said: “I am delighted to welcome Mikael and Richard to the board and know that their broad skills and experience will be a real asset to the company in the coming years. 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.”

Tesco shares rose 1% to 174p. They had fallen every day since the accounting scandal was announced.

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.”

Broadbent said Ohlsson would bring valuable retail experience to the board and that Cousins had broad international corporate experience. They will each be paid a basic fee of £70,000.

As well as heading one of the world’s largest caterers, Cousins was a non-executive director of consumer goods company Reckitt Benckiser for five years and was on the board of HBOS from 2007 to 2009. Tesco has branched out into catering with its Harris + Hoole coffee chain and the purchase of Giraffe restaurants.