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LONDON (Reuters) - Tesco's former chairman (TSCO.L), Ian MacLaurin, attacked the legacy of the retailer's previous chief executive Terry Leahy and told shareholders it could take three years for the world's No. 3 retailer to recover.
Tesco posted its first profit fall in two decades in April this year, wrote down the value of its global operations by $3.5 billion and confirmed plans to exit its loss-making business in the United States, Fresh & Easy, after spending five years trying to crack this market.
MacLaurin joined Tesco in 1973 as a management trainee and chaired the firm from 1985 to 1997, by which time it had overtaken J Sainsbury (SBRY.L) to become Britain's biggest retailer.
Leahy was chief executive from 1997 to 2011, a period when double-digit profit growth at the retailer was the norm.
MacLaurin told investors at Tesco's annual meeting on Friday that a CEO's performance should be judged both by day-to-day operations and their legacy.
"We're all very sad in this hall to see the legacy that Leahy left," he said.
"It is a very sad situation - your enormous writedowns, (and) the situation in America."
MacLaurin said Tesco's board and shareholders had to counter "an age of short-termism" by taking a long-term view and giving Phil Clarke - who took over from Leahy in March 2011 - and his team time to fix things.
"It is not going to happen overnight. This job is going to be probably two or three years," he said, noting that when rival Sainsbury's hit trouble in the early 1990s it took the retailer more than five years to reposition itself.
Reuters was not immediately able to contact Leahy for comment.
Tesco's current chairman Richard Broadbent said investors had to recognize that a focus on sustainable growth and delivering returns in the long term could impact underlying sales growth in the short term.
"Giving primacy to quarterly like-for-like sales does not automatically equate to long-term value creation," he said.
Earlier this month, Tesco posted a drop in quarterly underlying sales in its main British market, resuming a trend seen for most of the past three years and raising doubts about its 1 billion-pound turnaround plan.
Sales are also falling in South Korea, China and in eastern Europe.
Despite the underlying sales fall, Clarke insisted his recovery plan to revive the business in Britain, which accounts for two-thirds of group sales and profit, was on track.
"All our research tells us customers are beginning to notice the results of this change," he said.
Tesco avoided a rebellion from investors over executive pay at the annual meeting. Some 95.2 percent of shareholders who voted at the meeting backed the firm's executive pay report.
Investment advisory group Pensions Investment Research Consultants (Pirc) had called on investors to reject it in protest at what it regarded as excessive payoffs to two former executives.
Tim Mason, the former boss of Fresh & Easy, and Richard Brasher, ousted as the head of the UK business in March 2012, received pay-offs of 1.7 million pounds ($2.6 million) and 1.3 million pounds respectively in the 2012-13 year.
But the meeting was not without some shareholder grumbling.
"Why did you bungle the U.S. at a cost of 1 billion pounds plus," one shareholder.
Another shareholder criticized what he described as the "spin doctor type flatulence" of the annual report. One shareholder complained about Tesco's retailing in Britain of Guinness manufactured in Nigeria.
Shares in Tesco, down 12 percent over the last three months, were down 0.7 percent at 331.7 pence, valuing the business at about 27 billion pounds. ($1 = 0.6577 British pounds)
Reporting by James Davey, Editing by Rosalba O'Brien and Jane Merriman