Tesco has made the surprise announcement that its Chief Executive Dave Lewis will step down next summer and be succeeded by the former Walgreens Boots Alliance executive Ken Murphy.
John Allan, the retailer’s Chairman said: “It is with regret that I have accepted the resignation of Dave Lewis as Group CEO of Tesco … Dave has done an outstanding job in rebuilding Tesco since 2014 and he continues to have unwavering support from the Board.”
He described Murphy as a “seasoned, growth-orientated business leader”, highlighting that he has deep commercial, marketing and brand experience within retail and wholesale, developed during his time at Alliance Unichem, and then with Boots.
Murphy was Joint Chief Operating Officer at Boots UK & Ireland before rising to Executive Vice President, Chief Commercial Officer and President Global Brands at Walgreens Boots Alliance. He left the US group at the end of 2018 to return to the UK but retained a consultancy role. Due to contractual commitments to his previous employers, Murphy’s exact start date will be announced later.
Allan added: “Ken has values which align with our own, strong strategic and operating acumen, and is proven at the very top of a large and respected multinational retail group. I firmly believe we have the right person for the job.”
Lewis described his decision to step down as a personal one, stating: “I believe that the tenure of the CEO should be a finite one and that now is the right time to pass the baton. Our turnaround is complete, we have delivered all the metrics we set for ourselves … I have no doubt that Tesco will kick on again under new leadership next year.”
Lewis stressed that he is not leaving for another job. “From the middle of next year I intend to take some proper time out with my family, re-charge the batteries and then think about what might come next,” he said.
The former Unilever executive’s departure comes after a successful five years in which he has managed to restore growth and trust at a business severely damaged by an accounting scandal back in 2014.
Richard Lim, Chief Executive at Retail Economics, commented: “This surprise news will send shock waves through the industry. Upon arrival, he faced the momentous task of restoring the UK’s largest retailer to vitality. A lazer-like focus on the core food business, disposal of international assets and a ruthless approach to cost-cutting has left the retailer in a much more commanding position. The revival strategy is already well under way following the acquisition of Bookers, but he is leaving some mighty big boots to fill.”
Nick Everitt, Director of Advisory EMEA at Edge by Ascential, added: “Dave Lewis did a critical job in getting Tesco back to profitability by effectively turning the business around. However, no CEO is a one-man army and Lewis built a strong team under him, which remains intact. His work is now done and it’s time for the next phase of Tesco’s development, which requires a new leader with a refreshed vision.
“Ken Murphy has some tough calls to make as there are some big questions hanging over Tesco right now. What is its international business footprint going forward? What is its long-term plan for ecommerce and digital? These things are currently unclear. It takes a new CEO to address these points and build on the stable foundation that Lewis created. It’s a fine balance that Murphy must strike. He has to stamp his authority on the business but bring the existing leadership team with him, maintaining the momentum that Lewis started. If he can do this, Tesco will find a way forward.”
Tesco today reported a 25.4% rise in first-half underlying operating profit to £1.41bn, with margins up 87bps to 4.41%. However, like-for-like sales in its core UK business edged down 0.3% due to weak consumer confidence and tough comparisons with the same period last year which was boosted by a summer heatwave and the football World Cup.
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