Tesco can deliver at last thanks to Drastic Dave, says Unilever’s chief

TESCO boss Dave Lewis has received a major endorsement for his turnaround of the supermarket, after one of its biggest suppliers spoke out in praise of his five years in charge.

Alan Jope was promoted to chief executive of Unilever in January this year and has first-hand knowledge of Lewis’s work at the consumer goods manufacturer, which has an annual turnover of £46billion. Jope took control of Unilever’s personal care division after Lewis was poached by Tesco in 2014.

One Tesco shareholder criticised Lewis last week for leaving before restructuring at wholesaler Booker – which Tesco bought last year – was complete. There have also been questions raised about his successor: Ken Murphy will arrive next year from Walgreens Boots Alliance, which owns the chemist Boots. Tesco’s board says the recruitment process was rigorous.

But when Jope was asked to comment on Lewis’s work at both Unilever and Tesco, he said: ‘Dave did a great job while he was president of our beauty and personal care division and I have deep admiration and respect for how he successfully turned around Tesco.’

Within weeks of arriving at Tesco, Lewis alerted the market to an accounting black hole in the business. Tesco reported a £6.4billion loss shortly afterwards as Lewis began what is now regarded as a textbook turnaround of one of Britain’s biggest firms. The company’s stock market value has since soared by more than £10billion.

The relationship with Unilever has not always been easy. In 2016, Unilever clashed with Tesco after demanding 10 per cent price rises for well-known brands including Marmite and Ben & Jerry’s icecream. The dispute left shelves at the supermarket low on stock but deliveries resumed after the companies resolved their differences.

While Lewis, nicknamed Drastic Dave for his reforming zeal, was lauded last week as the man who rescued Tesco, its share price closed the week 1.2 per cent lower after the announcement of his departure.

The supermarket has focused on improving profitability and is forecast by City analysts to make a profit of £2.2billion next year on sales of £66billion. Jope’s comments will be seen by Tesco investors as a reassuring signal that the firm is in rude health, as the supermarket prepares for the second phase of its development plan. This includes the launch of new ranges, a relaunch of its Clubcard loyalty card and an ambitious plan to ramp up its online delivery service.

Lewis insisted on Wednesday that the next phase is a blueprint for growth, but his comments left some commentators wondering how much more progress a new boss could make in the fiercely competitive grocery market. Bruno Monteyne, an analyst at stockbroker Bernstein, said preparing Tesco for five years of growth would be ‘a very tough challenge’.

He said: ‘Investors don’t just back a firm, they back the senior management. The new chief executive, Ken Murphy, is largely unknown to the Tesco shareholder base.

‘Even what they know of him – for example from his role as Boots’ chief operating officer in the UK until 2013 – does not imply they back him with the same enthusiasm as they back Dave Lewis.’

Monteyne said Tesco’s share price fall ‘indicates that not everyone is as willing to back the new, unproven chief executive’.