Tesco boss Dave Lewis’ shock decision to quit after five years in the role is leaving his successor – Walgreens Boots Alliance chief Ken Murphy – some “mighty big boots to fill”, according to one leading retail analyst.
Tesco announced the move at its interim results, in which it reported a 6.7% rise in first-half profits to £494m.
Lewis, who said he is leaving for “personal reasons”, has been at the helm of the retail giant since 2014, joining from Unilever. Within weeks the company was forced to reveal that it had been overstating its profits and subsequently revealed a loss of £6.4bn, the biggest ever suffered by a UK retailer.
Since then, Lewis has been widely credited with steering Tesco back to health by slashing thousands of jobs and offloading non-core businesses, including Blinkbox, Hoole + Harris, Dobbies Garden Centres, Giraffe Restaurants, and its in-shop opticians, to go “back to basics”.
A planned sell-off of DunnHumby was shelved in 2015. However, last year, Tesco launched a separate budget chain, Jack’s, to compete with Lidl and Aldi, and also completed its acquisition of food wholesaler Booker, which owns the Budgens, Londis, Euro Shopper and Premier Stores brands.
Having initially cut back on Clubcard, Lewis recently confirmed the retailer is splashing the cash on the loyalty scheme as part of plans to add “more value and connectivity” across its grocery, banking and mobile businesses. This has included major activity around Tesco’s 100th birthday celebrations.
In May, Lewis said he was confident the mammoth turnaround would be complete by the end of the current year.
In a statement, Tesco chairman John Allan said: “Dave has done an outstanding job in rebuilding Tesco since 2014 and he continues to have unwavering support from the board.
“Some time ago, however, he indicated to me that he was considering the best time to hand over to a successor. His openness allowed me to begin a thorough and orderly process to identify a potential candidate to replace him.
“As a result, today, we have appointed Ken Murphy to succeed Dave as group CEO of Tesco next summer.”
Murphy, who is a qualified accountant, has worked in health and beauty retail all his life. His first senior role was as finance director of pharmaceutical wholesaler UniChem which eventually became part of the same group as Boots, now owned by Walgreens Boots Alliance.
Having served as chief operating officer at Boots, he joined the parent company and was most recently chief commercial officer and president of global brands.
Richard Lim, chief executive of Retail Economics, said that the move “will send shockwaves through the industry”.
He added: “A laser-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.”
Markets.com chief market analyst Neil Wilson commented: “Job done, I’m off – can’t say fairer than that. Profits are back up. Dominant position in UK grocery market re-established. Booker deal pulled off with aplomb. Maybe some questions over Jack’s and moderation in like-for-like sales, but these are challenges for the next guy.”
Speaking of the next chief executive, Wilson added: “Ken Murphy has solid pedigree, coming from Walgreens Boots Alliance, a retailer that understands cost cutting. He’ll need to employ these skills at Tesco. Moreover, the battle with the discounters is only just starting.”
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