Comedy and crossed words were the order of the day, but CEO’s honesty kept shareholders at bay - and has bought him more time

The last time one Tesco shareholder visited Cardiff City Hall Dame Shirley Bassey was auctioning her clothes for charity. “It was brilliant. Every time someone bought a dress she came down off the stage and sang Hey Big Spender,” he reminisced.

Last week the only Dame on stage was Tesco lawyer Lucy Neville Rolfe, and CEO Philip Clarke had no such tactics at his disposal - but that didn’t prevent the odd comedy moment.

Questions ranged from why Tesco had scrapped its printed guide of stores for caravan enthusiasts to how its turtles met their deaths in China.

Yet in what had been billed as the latest chapter of the shareholder spring, there were certainly no revolutions here, as shareholders went over much of the same old ground. So what did we learn?

With its US arm, Fresh & Easy Neighborhood Market, struggling, Clarke had already cast doubt on its long term prospects earlier in the year, when he shelved its forecast breakeven target and said it would not stay on out of sentiment or ego.

He repeated the promise here but as the board brushed aside calls from the Change To Win Investment Group (CTW) for a strategic review, Clarke was openly contemptuous of the US union-backed group’s new report claiming a series of problems over service and quality. He even refused to speak directly to the CTW contingent, appearing genuinely angry they were taking up so much time.

“I started as CEO a year ago amid an uncertain economic outlook and that hasn’t improved and shows little prospect of improving”

CEO Philip Clarke

Clarke also took pleasure in pointing out that Tesco’s global operations, despite the global economic turmoil, still make more money than all of its domestic rivals in total.

Yet it was the domestic issues that dominated. Facing angry questions over quality of service, Clarke admitted to one shareholder complaining about unmanned tills in Sevenoaks: “We have let you down.”

It felt like he meant it. But it is taking longer than many would like to get the job done, with Clarke admitting measures to address availability, service and quality, although “urgent and vital”, would take several more months at least. He told of his own personal experience on the day of the agm, when a truck breakdown meant empty shelves were awaiting the CEO when he arrived to inspect the results of their turnaround plans. Not good news for one store manager. And the arrival of 800 new staff by the autumn can’t come soon enough.

However, Tesco does have other cards to play. CFO Laurie Mcllwee told The Grocer it will soon unleash a major couponing blitz using Clubcard to target customers with personalised offers involving “many more” than the seven million in previous trials.

Clarke also has two crucial appointments to make - a new agency for an ad onslaught that could see the end of the Every Little Helps strapline. And he is on the hunt for a UK commercial director, following the departure of UK CEO Richard Brasher.

The other name dominating thoughts at the agm was Sir Terry Leahy. With a palpable sense of longing for the good old days, one shareholder lamented the loss of Leahy and Brasher and the “puny” dividend. Another asked if Clarke would resign if he failed in his turnaround or “are we going to have to vote you out,” but that was as rebellious as they got.

Speaking alongside his CEO for the first time,chairman Sir Richard Broadbent said Tesco, like all enduring companies, had shown it was prepared to reinvent itself. “My overriding sense is that this is a business that is unafraid of change.” But he added that change would not include the departure of Clarke, whom he described as one of the best retailers in the world.

“If he can get the company back to like for like growth of 2-3% he will be home and dry,” said one former supermarket CEO.

“And what do you get by changing horses? Unless there’s a real meltdown I think you’ve got to stick with him and give him two to three years to get it right.”