Tesco shareholders criticise retailer's management at AGMFriday 27 June 2014 16.15
Shareholders at Tesco's annual meeting have berated the British retailer's board 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 anymore. 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 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 online.
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 as before.
Mr 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% 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% in the last 11 months, giving the firm a market valuation of £23bn, and the continued poor performance has raised questions over whether Mr Clarke is the right man to lead the FTSE100 group.
However, Harris Associates, one of the company's ten biggest shareholders, and former chief executive Ian MacLaurin have both recently given their backing to Mr Clarke, saying he needs more time to fix the business, and none of the investors speaking at today's meeting called for Mr Clarke or Mr Broadbent to step down.
Mr 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 profits.
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% of votes cast at the meeting opposed Mr 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'".