Tesco Narrows Search For Broadbent Successor

Tesco (Xetra: 852647 - news) has narrowed the search for a successor to Sir Richard Broadbent as it plots its recovery from the profit overstatement and sales weaknesses which have plagued the company in recent months.

Sky News has learnt that Tesco has shortlisted Sir Ian Cheshire, the recently departed chief executive of Kingfisher (LSE: KGF.L - news) , and John Allan, the chairman of housebuilder Barratt Developments (LSE: BDEV.L - news) , to take over from Sir Richard.

The process remains fluid and it remains possible that another heavyweight businessperson could yet become Tesco's next chairman, according to a person close to the process.

The retailer's board is keen to finalise an appointment in the next few weeks, although the timetable could slip, the person added.

Sir Richard said last autumn that he would step down this year after it emerged that profits had been overstated by £263m because of the inaccurate booking of revenue from suppliers to the supermarket giant.

The Serious Fraud Office has now launched a formal criminal investigation into the issue, which could last for many months.

Tesco suspended nine executives over the affair , four of whom have left the company and one of whom was subsequently reinstated.

The retailer's next chairman will have to grapple with the fallout from the commercial scandal as well as helping Dave Lewis, the new chief executive, navigate what analysts say is the toughest environment for big food retailers for many years.

Earlier this month, Mr Lewis outlined plans to close Tesco's head office , close dozens of stores and terminate its defined benefit pension scheme in an effort to save costs.

Tesco shares rose by 15% on the day of his announcement, which also included news that its Christmas trading performance had been better than the City had anticipated.

Either Sir Ian or Mr Allan would be well-received by Tesco shareholders.

Sir Ian is an experienced retailer who is widely regarded to have done an excellent job at Kingfisher, which owns the B&Q DIY chain.

Some people close to him believe that he is more likely to take another full-time executive role than a non-executive post such as the Tesco chairmanship, but insiders confirmed that Tesco has asked him to consider taking the job.

Mr Allan chairs a number of companies, including the payments business Worldpay, and sits on the boards of Royal Mail (LSE: RMG.L - news) and Dixons Carphone (LSE: DC.L - news) , which reported strong Christmas sales on Wednesday.

Among the other candidates reportedly in the frame for the Tesco job was Archie Norman, the former Asda boss, although it is unclear whether he is interested in pursuing it.

The debate over Tesco's decline was reignited this week when Sir Terry Leahy, the former chief executive, blamed his successor, Philip Clarke, for "a failure of leadership".

A series of profit warnings last year led to Mr Clarke being sacked, but analysts pointed out that some of Tesco's least successful initiatives in recent years, including its expansion into the US and China, took place during Sir Terry's tenure.

The Tesco recruitment process is being led by Patrick Cescau, Tesco's senior independent director, along with JCA Group, a top City headhunter.

Tesco declined to comment while neither of the candidates was available for comment.