Britain's biggest retailer Tesco said Wednesday that CEO Dave Lewis will step down next year, after declaring his mission "complete" to turn around the group's fortunes.
Lewis, who has axed thousands of jobs in a radical overhaul of the supermarket chain since arriving five years ago, is leaving for personal reasons and will be replaced by Walgreens Boots Alliance executive Ken Murphy, Tesco said in a statement.
Former Unilever director Lewis was parachuted into Tesco in July 2014 to help turn around the group, which at the time was mired in an accounting scandal and fierce competition in home market Britain.
"My decision to step down as group CEO is a personal one," he said in a statement alongside the publication of the group's first-half earnings.
"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, we have delivered all the metrics we set for ourselves. The leadership team is very strong, our strategy is clear and it is delivering."
News of his shock exit shocked investors, but shares nevertheless rose two per cent to 244.30 pence on the London Stock Exchange, which was generally lower.
More From This Section
"Tesco has dropped a bombshell on investors by announcing the departure of boss Dave Lewis," said Markets.com analyst Neil Wilson.
"Job done, I'm off -- can't say fairer than that. Profits are back up. Dominant position in UK grocery market re-established."
Under his tenure, Lewis spearheaded the purchase of British wholesaler Booker last year, which transformed Tesco into the nation's top food business.
He clinched a purchasing alliance with French peer Carrefour to increase both companies' leverage with suppliers in the competitive supermarket sector.
And he launched a new discount food store chain in Britain, named "Jack's", as it faces fierce pressure from German-owned discounters Aldi and Lidl.
Tesco has also weathered poor consumer sentiment in its Brexit-facing home market, and intense competition also from US online titan Amazon.
"Strategically, it is becoming increasingly apparent that the Booker acquisition was a masterstroke, while the tie-up with Carrefour and the launch of Jack's provide tantalising opportunities," said Interactive Investor analyst Richard Hunter.
"The legacy he (Lewis) leaves is one of a company whose turnaround has been impressive to watch," he added.
More than 10,000 jobs have been axed in a massive cost-cutting drive, since Lewis took charge with the brief to save 1.5 billion pounds.
"Dave has done an outstanding job in rebuilding Tesco since 2014 and he continues to have unwavering support from the board," said Chairman John Allan.
Turning to the new CEO, he said: "Ken has values which align with our own, strong strategic and operating acumen, and is proven at the very top of a large and respected multinational retail group.
"I firmly believe we have the right person for the job."
Lewis will depart in the summer, while Murphy's start date will be given at a later date due to contractual commitments.
Murphy is currently executive vice president, chief commercial officer and president of global brands at Walgreens Boots Alliance.
Turning to its earnings performance, Tesco said that its first-half net profits slid four percent to 324 million pounds (USD 398 million, 364 million euros) from a year earlier.
However, it had rebounded into annual net profit last year on strong sales and restructuring following a net loss of pounds 40 million in 2016/2017 -- when it was hurt by costs arising from the accounting scandal.
Prior to the arrival of Lewis, Tesco was already undergoing a major rehaul. It shuttered its failed US division Fresh & Easy in 2013 and exited Japan in 2011.
Tesco is the world's third-biggest supermarket chain after France's Carrefour and global leader Wal-Mart of the United States, and also has global operations dotted elsewhere including China, India, Ireland, Malaysia, Slovakia and Thailand.
Last year's 3.7-billion pounds purchase of Booker handed Tesco Britain's largest cash-and-carry operator which sells goods to more than 503,000 customers -- including grocers, pubs and restaurants.
Disclaimer: No Business Standard Journalist was involved in creation of this content
