UPDATE 2-Under-fire McIlwee quits as Tesco finance boss
* McIlwee exit adds pressure on struggling grocer
* Decision follows months of speculation
* Some analysts say McIlwee seen as a scapegoat
* Tesco struggling versus discount chains (Adds comment, shares, background)
LONDON, April 4 (Reuters) - Tesco's finance chief Laurie McIlwee quit on Friday, delivering a fresh blow to CEO Philip Clarke who is struggling to turn around the British-based supermarket operator.
Announcing his decision just days before results that are expected to show another decline in profits, McIlwee said he would quit the board and resign after five years as CFO but stay on long enough to hand over to a successor.
"The board is commencing a process to find a new chief financial officer with both internal and external applicants being considered," Tesco said in a statement.
Shares in the group were down 1.5 percent at 286 pence at 1515 GMT, their lowest level in more than five years.
McIlwee became CFO in January 2009 and had been with the retailer since 2000. He had been the only other executive director on the board alongside Chief Executive Clarke.
"After 14 years at Tesco I feel that now is the right time for me to pursue new opportunities," McIlwee said.
Speculation over McIlwee's position had been surfacing for months. In October he became the focus of investor disquiet after Tesco shocked investors by reporting a collapse in profits at its central European unit, which he had failed to signal.
Sources familiar with the situation had previously told Reuters that some investors were not happy with the way McIlwee interacted with them, and that his position was under threat.
Media reports said he had also clashed with Clarke over some areas of strategy. Clarke himself raised eyebrows last month when he said at an industry conference that his tenure as CEO might only be "for a few years".
Having dominated the British high street for years, the 95-year-old Tesco stunned the industry in 2012 when it issued its first profit warning in 20 years and has struggled since then.
In common with Britain's three other leading grocers - Wal-Mart's Asda, Sainsbury's and Morrisons - Tesco is losing market share as it is being squeezed between hard discounters Aldi and Lidl and upmarket grocers Waitrose and Marks & Spencer .
It is expected to post another decline in profit when it publishes 2013-14 results on April 16.
"It is perhaps more than a little unfair that Tesco's Laurie McIlwee is to be the scapegoat for Tesco's profit weakness, but his communications skills seem to have left him vulnerable," retail analyst Nick Bubb said.
According to consensus forecasts published on Tesco's website, analysts expect Tesco to post a group trading profit of 3.24 billion pounds for 2013-14, down from 3.45 billion pounds in 2012-13, its second straight year of decline. (Editing by Susan Fenton)