By Angelo Young -
Tesco (LONDON:TSCO) store in Loughborough, U.K., Jan. 12, 2012." title="© Darren Staples/Reuters. A shopper leaves a Tesco store in Loughborough, U.K., Jan. 12, 2012." rel="external-image">
Six months after David Lewis became the boss of Britain’s largest retailer, Tesco PLC employees are facing more layoffs than previously announced. As many as 10,000 Tesco workers could be let go this year, as Lewis aims to spin off unprofitable Internet and TV-streaming services, close dozens of underperforming stores and reduce head office spending by 30 percent, according to Agence France-Presse.
CEO Lewis is still without a chairman to assist him in restructuring Britain’s largest private employer, which has 310,000 employees worldwide. Archie Norman, the former boss of Asda, one of Tesco’s main British rivals and a Walmart subsidiary, is rumored to be the front-runner to join Lewis in one of the largest corporate restructurings in the grocery store chain’s 96-year history.
Norman would replace Richard Broadbent, who resigned in October after British authorities launched an investigation in to Tesco’s over-reporting of its profits last year.
“The chairman position, in taking so long to remedy, perhaps shows the perceived poisoned chalice that is this role,” Clive Black, retail analyst at Shore Capital, told The Independent in a report published Monday. “If Archie Norman can be persuaded and complement and support Dave Lewis, then we see it as a win-win.”
The layoffs come after Tesco retreated from its global expansion last year, and thew company has been facing stiff competition at home from German discount retailers Aldi and Lidl, along with Tesco’s primary competitors Sainsbury’s, Morrisons and Asda.
Lewis has earned the nickname “Drastic Dave” in the U.K. for how he cut costs when he was head of consumer product giant Unilever (LONDON:ULVR) plc’s U.K. and Ireland operations. In 2007, Lewis decreased the division’s operating expenses by 40 percent through layoffs and a drastic reduction in the company’s product line. He was rumored to be next in line to run Unilever when he abruptly resigned to head Tesco in July of last year.
One of Lewis’s first acts at Tesco’s was to end its corporate dividend. Most of the layoffs will come from the company’s corporate headquarters in an effort to simplify management now that Tesco has pulled back considerably from global operations. About 3,000 jobs could be culled by removing team leaders at larger stores, according to The Guardian.
Under Lewis, Tesco has managed already to reverse its losses. Last week, Tesco was the only grocer of Britain’s four leading chains to report an increase in sales for the three months ended Feb. 1, according to industry analytics firm Kantar Worldpanel.