Every little helps to secure Tesco future

Retail: ‘Encouraging numbers’ from shop chain, says expert

Tesco is well-placed to stay in pole position among the UK’s top supermarkets, a market expert said yesterday.

Arlene Ewing, investment manager at financial services firm Brewin Dolphin, said there were enough positives in first half figures from the grocery giant to warrant a confident outlook for its prospects.

Sales during the six months to August 24 were flat compared to a year ago at £28.3 billion, with pre-tax profits up 6.7% at £494 million. UK and Ireland sales were up 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% fall in Asia.

Tesco also announced chief executive Dave Lewis was to quit the supermarket next summer.

He will be replaced by Ken Murphy, who was joint chief operating officer at Boots UK and Ireland before rising to executive vice-president, chief commercial officer and president of global brands at Walgreens Boots Alliance.

Ms Ewing said the “comparators” for Tesco were always going to be tough after a strong performance last year.

However, she added: “There are some encouraging numbers in today’s update, particularly around cash flow and operating profit. Investors will also be pleased with a substantial hike to the interim dividend (from 1.67p per share last year to 2.65p this time).

“There will undoubtedly be a period of transition with the arrival of a new CEO, but Tesco is beginning to look the best placed of the large UK supermarket groups following its wide scale transformation programme.”

Mr Lewis insisted Tesco’s turnaround after an accounting scandal a few years ago was complete and said his decision to step down was personal.

He added: “The tenure of the CEO should be a finite one and that now is the right time to pass the baton. The leadership team is very strong, our strategy is clear and it is delivering.”

Mr Murphy has spent his career with high street chain Boots. His basic salary at Tesco 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%.

Chairman John Allan said he was first approached “some time ago” by Mr Lewis to say he was ready to move on.

“Tesco is beginning to look the best placed of the large UK groups”

FINAL SHIFT: Tesco chief executive Dave Lewis is stepping down from the role after an expert said the latest figures from the firm were good