Tesco CEO Dave Lewis to step down

Bloomberg London | Updated on October 02, 2019 Published on October 02, 2019

Tesco Plc Chief Executive Officer Dave Lewis. File Photo   -  Reuters

Walgreens Boots Alliance’s Ken Murphy to succeed

Tesco Plc Chief Executive Officer Dave Lewis is stepping down next summer and will be succeeded by a surprise choice, Walgreens Boots Alliance’s Ken Murphy.

Lewis, 54, will leave the UK’s largest retailer after a turnaround that began when he joined Tesco in 2014 in the wake of a massive accounting scandal. Since then he’s leveraged the company’s position as UK grocery market leader to boost profits despite consumer jitters over Brexit and the shift to online shopping and discounters Lidl and Aldi.

Tesco shares fell 2.1 per cent early Tuesday in London after the company also reported a decline in first-half sales.

While there’s been speculation that Lewis was ready to move on, Murphy is a dark-horse choice to succeed him. The spotlight previously was on internal candidates such as Charles Wilson, former chief of wholesaler Booker, which Tesco acquired last year. But he stepped down from his role running the retailer’s UK arm after being diagnosed with cancer.

Murphy was joint chief operating officer at Boots UK & Ireland before rising to chief commercial officer and president of global brands at Walgreens Boots, the trans-Atlantic drugstore operator.

The departing CEO, who joined the retailer from consumer-goods giant Unilever, said on a call that he’s not leaving for another job. Five years ago there was a lot of pressure, financially and in terms of the relationship that the brand had with consumers, he said. The business is now healthy, vibrant and there’s a real energy.

Orderly process

Tesco said Lewis informed Chairman John Allan some time ago about his desire to move on, sparking an orderly succession process. Wilson did not want to be considered for the top job, Allan said on the call.

Under Lewis, Tesco has been streamlining its store operations, cutting thousands of jobs and closing fresh-food counters in some UK outlets while starting a discount brand called Jacks. The company ended a short-lived foray into the US before the CEO’s arrival, and he continued the international retrenchment by selling South Korean and Turkish operations, while eyeing expansion in markets like Thailand.

On the call, Lewis confirmed a Bloomberg report that Tesco has been weighing options for its Polish business. Tesco last month agreed to sell its mortgage portfolio to Lloyds Banking Group Plc. Tesco shares have gained 26 per cent this year. “They’ve returned about 2.1 per cent a year since Lewis took the helm in 2014,” according to data compiled by Bloomberg. The stock declined 11 per cent annually under his predecessor, Philip Clarke.

Walgreens Boots Alliance shares have fallen around 20 per cent so far this year. In the UK, the Boots chain has said it will close 200 of its 2,500 stores and dismiss 350 employees at its headquarters. Last year, operating profit slumped 22 per cent to a near-decade-low of 391 million pounds ($479 million).

The announcement of the new CEO came as Tesco reported a half-year sales decline of 0.4 per cent, hurt by comparisons with a year earlier when hot weather, the soccer World Cup and royal wedding boosted results. Operating profit beat analysts estimates.

Published on October 02, 2019
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