CEO of U.K. Grocery Giant Tesco to Step Down -- Update
October 02 2019 - 6:26AM
Dow Jones News
By Saabira Chaudhuri
LONDON -- The head of one of the world's largest grocery chains,
Tesco PLC, is stepping down, handing the reins to a top executive
at pharmacy giant Walgreens Boots Alliance Inc.
U.K- based Tesco said Chief Executive Dave Lewis will be
replaced next summer by Ken Murphy, Walgreens's chief commercial
officer and its president of global brands.
The 54-year-old Mr. Lewis is widely credited with turning around
Tesco's performance after taking the helm five years ago, following
an accounting scandal and a bruising market-share battle in the
U.K. with discounters.
The first outsider CEO in Tesco's history, he was hired from
Unilever PLC, the owner of brands like Dove soap and Ben &
Jerry's ice cream, and a huge Tesco supplier.
He slashed prices, put more staff on shop floors and sold
noncore businesses and international units to focus on Tesco's home
market. In his first year on the job, Tesco reported the biggest
loss in its history as Mr. Lewis logged a string of
impairments.
Gradually, though, performance stabilized. Bernstein analyst
Bruno Monteyne pointed to Tesco's volume growth,
better-than-expected margin growth and strong cash generation.
Punctuating the turnaround effort, Tesco said Wednesday its
pretax profit rose 6.7% in the first half of fiscal 2020. Investors
cheered, sending shares up 2%. For the six months ended Aug. 24,
Tesco said pretax profit was GBP494 million ($606.6 million)
compared with GBP463 million in the same period last year. Adjusted
operating profit -- a metric closely watched by analysts which
excludes exceptional items and other one off items -- was GBP1.41
billion in the six months to Aug. 24, up from GBP1.12 billion the
previous year.
"The company could not have delivered any stronger on the
recovery investment thesis," said Mr. Monteyne.
During his tenure, Mr. Lewis also bought the U.K.'s largest food
wholesaler Booker Group PLC for GBP3.7 billion in 2017. He revamped
Tesco's online offerings and launched a discount chain to compete
with German discounters Aldi and Lidl, two chains that had started
taking market share from Tesco and Britain's other established
grocery chains.
He also notably took on his previous employer Unilever, pulling
its products off shelves in a high-profile pricing spat dubbed
"Marmitegate" by the British press. Mr. Lewis refused to raise
prices on products like Marmite -- a salty yeast-based breakfast
spread beloved by Britons -- despite a sharp drop in the pound.
Sterling's slide in the wake of a 2016 referendum in Britain to
break with the European Union sent import costs soaring. Unilever
products eventually returned to Tesco's shelves.
Britain's highly consolidated grocery market is among the
world's toughest and most competitive, setting up a challenge for
Mr. Murphy. The 52-year-old, who hails from Cork in Ireland, headed
up commercial strategy for Walgreens Boots's health-and-beauty
division and was joint chief operating officer at Boots for the
U.K. and Ireland before his current role. He will arrive at Tesco
as Aldi and Lidl continue to step up their assault on the U.K.
market and as Amazon.com Inc. increases its focus on the grocery
industry. Amazon's Whole Foods has a limited footprint in the
U.K.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
October 02, 2019 06:11 ET (10:11 GMT)
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