Chief executive of Tesco announces surprise departure
TESCO boss Dave Lewis is stepping down from the supermarket he has led since September 2014.
The group’s chief executive, who said the grocer’s turnaround was complete, will be replaced by Boots lifer Ken Murphy.
Mr Lewis said: “My decision to step down as group CEO is a personal one.
“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 and we have delivered all the metrics we set for ourselves.
“The leadership team is very strong, our strategy is clear and it is delivering.”
He added he had no new job lined up and intended to take a break from work while deciding what to do next.
Mr Lewis said: “I’m going to step back and think about what I want to do with my family.
“I’m 54 years old and I’m going to sit back and think where I can make the best contribution.”
The former Unilever executive, who joined Tesco in 2014 and quickly uncovered an accounting scandal that led to a settlement with the Serious Fraud Office, worked with Mr Murphy in a previous job.
Asked what advice he would give to the new chief executive, Mr Lewis said: “Respect the expertise that exists within the business. Use your ears more than your mouth.”
Mr Murphy has spent most of his career with Boots, first working with Alliance Unichem.
He was joint chief operating officer at Boots UK and Ireland before rising to executive vice president, chief commercial officer and then president of global brands at Walgreens Boots Alliance.
Mr Murphy’s basic salary will be £1.35m a year with pension contributions of 7.5%.
By comparison, Mr Lewis had a base pay of £1.25m with pension contributions of 25%.
Tesco chairman John Allan defended the 8% pay rise in a year of major restructuring and redundancies at the supermarket, pointing out that Mr Lewis had not taken a pay increase since joining.
He also explained that the pension contribution fall for Mr Murphy came after shareholders raised concerns that Mr Lewis’s pension contribution was far higher than a typical employee.
The chairman said: “Dave’s pension contribution was entirely normal and appropriate when he joined the business.
“We have responded to that (shareholder concern), so in that sense you can offset that against the modest increase in salary.”
He added that highly rated Booker chief executive and former Tesco UK boss Charles Wilson had been approached for the role but declined.
Mr Lewis explained: “We had that career conversation with Charles. He was very clear with both of us. While he is fit and well, he did not want to be considered a successor to myself.”
His decision to leave came as the supermarket revealed sales in the six months to August 24 were flat at £28.3bn, with pre-tax profits up 6.7% at £494m.
UK and Ireland sales were up by 0.1% on a like-for-like basis, but internationally there were falls in sales, with a drop of 3.1% in central Europe and a 1.3% decline in Asia.
Mr Lewis, who will stay in the position until next year, also revealed online sales were increasing following an upgrade to the firm’s picking abilities, rising 7.4% over the period compared with a year ago.
He said winning more customers was front and centre in the grocer’s mind, and announced plans to open 150 Tesco Express stores within the next three years.
Tesco is Northern Ireland’s biggest grocer and has approximately 50 stores here.