New Tesco boss faces battle to win over City
Ken who? Boots veteran parachuted in to succeed Dave Lewis
THE boss of Tesco stunned the city yesterday as he announced he was quitting, paving the way for a ‘relative unknown’ to take the reins at Britain’s biggest grocer.
Dave Lewis was hailed as ‘ the bloke that saved Tesco’ after he said he was leaving to take ‘proper time out to recharge’ with his wife and two daughters.
The 54-year- old, who declared that the turnaround was ‘complete’ having taken over when Tesco was in crisis in 2014, will stay until next summer when he will be replaced by Ken murphy, a former Boots executive.
The new appointee, 52, is widely seen as a gamble for the £23.5bn company. and he will be paid more than Lewis ( picturedleft), who returned the company to profit after a £6.4bn loss – the biggest in British retail history. retail analyst nick Bubb said: ‘what Dave Lewis will do next is unclear but the bigger question is why Tesco overlooked an array of internal candidates and have gone outside and appointed Ken murphy from Boots – aka Ken who?’
Lewis will leave with a fortune of over £27m but news of his departure was so closely guarded that even his children, 20 and 23, were only told on Tuesday. Lewis, once nicknamed ‘Drastic Dave’ for brutal cuts at Unilever, told investors Tesco’s turnaround was ‘complete’. The company reported £494m halfyear profits, putting it on track to an annual profit of £1.8bn.
Lewis said he hoped Tesco would double online food orders as he announced 25 new automated stock-picking centres, tacked on the back of existing stores. a new clubcard, offering 10pc savings per month on big shops, in return for an £7.99 monthly fee, is being launched later this year to increase customer loyalty. But experts said murphy ( pictured will face challenges. Tesco’s market share has dropped to 26.9pc from 27.4pc the previous year, while the German discounters aldi and Lidl now have 14.1pc of the market, up from 13.1pc.
He will have to solve stagnant sales and the company’s central european business is struggling, with a sale of the dominant Polish business rumoured.
analysts also questioned whether murphy could command the confidence of the markets, noting that Lewis was well-known from his time at Unilever. Bruno monteyne at Bernstein said: ‘none of us really know why Dave Lewis is leaving and this question will be high on investors’ minds. equally his replacement Ken murphy will be relatively unknown.’
neil wilson, another analyst, said: ‘Tesco’s profits are back up but the outfit could be in better shape. There are questions over overseas markets and sales. moreover the battle with the discounters is only just starting.’
Irishman murphy, who worked the till in his father’s shop aged 15, went to cork University and Harvard Business School.
The married father-of-three is a qualified accountant, and has worked in health and beauty his whole career. He will start on a pay packet worth £4.9m per year – as a result of an 8pc rise from Lewis’s basic salary.
He could earn an extra £3.7m if targets are hit over five years. murphy will join with a three-year strategy in place, whereas Lewis arrived only with ‘ survival’ in mind, the firm said yesterday.
During his tenure the share price rose from 170p to 240p, a 40pc rise. Its stock opened 2.7pc down on the news of Lewis’s departure, but closed 0.2pc up at 240p, giving a market capitalisation of £23.5bn.