(Adds quotes from investors)
By James Davey
LONDON, June 27 Shareholders at Tesco's
annual meeting berated the British retailer's board on Friday
for the low share price, poor results and questioned whether the
management knew what they were doing.
"You just have not got a clue," one private investor told
the heated meeting in central London. "No wonder customers don't
trust you any more. We are paying you millions, you're supposed
to be the best brains in Britain. You are abusing us."
Tesco, which had been the darling of the sector during two
decades of uninterrupted earnings growth, stunned the market in
2012 when it issued its first profit warning in living memory.
It has since struggled to get to grips with a rapid change
in shopping habits in the UK where instead of making one big
weekly shop more consumers are buying less more often from a
variety of local stores, discounters, upmarket stores and
With Tesco's shares trading at close to six-year lows,
Chairman Richard Broadbent accepted that the company was not
doing well enough but he asked investors to remain patient.
"The board is aware that the share price has been poor over
the last year," he told the packed meeting. "You and we want to
see a better performance.
"We believe the considered steps we're taking will deliver a
better performance in a sustainable fashion for the long-term
future of the business."
Having opened the meeting with a plea for shareholders not
to make speeches but just to ask questions, Broadbent and Chief
Executive Philip Clarke endured a series of speeches from
private investors taking it in turn to denounce the board.
"Once you have lost your reputation, it's very difficult to
get it back," one of the shareholders told the meeting, adding
that even he no longer shopped at the "arrogant" Tesco as much
Clarke, who remained calm throughout the meeting, said he
had introduced "radical" changes to the retailer, the third
biggest in the world behind Wal-Mart and Carrefour
, but these would take time to come through.
Tesco reported in April a 6 percent fall in annual group
trading profit, a second straight year of decline, and then
followed that up this month with its worst quarterly sales drop
in its home market in 40 years.
Its share price has lost 23 percent in the last 11 months,
giving the firm a market valuation of 23 billion pounds ($39
billion), and the continued poor performance has raised
questions over whether Clarke is the right man to lead the FTSE
However, Harris Associates, one of the company's 10 biggest
shareholders, and former chief executive Ian MacLaurin have both
recently given their backing to Clarke, saying he needs more
time to fix the business, and none of the investors speaking at
Friday's meeting called for Clarke or Broadbent to step down.
Clarke, who began his 40-year Tesco career aged 14 stacking
shelves in a store managed by his father, is two years into a
multi-billion pound turnaround plan for the core British
business, which accounts for two thirds of the group's sales and
He has invested in store refits, staff, product ranges and
online services, has cut prices and dropped an industry leading
profit margin target.
But the heavy investment programme has coincided with a
fundamental change in the way people shop, with consumers
deserting the big out-of-town stores, championed by Tesco, in
favour of local convenience shops that enable them to buy little
and often, and to waste less.
In common with Britain's three other leading grocers -
Wal-Mart's Asda, Sainsbury's and Morrisons -
Tesco has been squeezed between hard discounters Aldi and Lidl
and by Waitrose and Marks & Spencer at the premium end.
Abroad, the group has also had to retrench, including in the
United States where it lent money to an investment company to
take its loss-making business off its hands.
John Farmer, another private shareholder, described that as
a sign of "monumental incompetence".
All resolutions at the meeting were, however, passed with
very little dissent. Only 1.14 percent of votes cast at the
meeting opposed Clarke's re-election as a director.
Speaking to reporters after the formal meeting, Clarke said
shareholder criticism at the meeting "stiffens my resolve to
keep going with the strategy we set out rather than just say
'tear it up and do something else'".
(Writing by Kate Holton; Editing by Elaine Hardcastle and Greg