Tesco CEO to step down after turnaround drive

Bloomberg

After Tesco Plc said Chief Executive Officer Dave Lewis will hand the baton to drugstore executive Ken Murphy, one analyst summed up his surprise by quipping, “Ken who?”
While Murphy is known inside Walgreens Boots Alliance Inc for spearheading its push into China, he’s a relative unknown in London financial circles. Next summer he’ll take over the top job at the UK’s biggest retailer, where he’s got big shoes to fill. Under Lewis, who took over in 2014, Tesco has bounced back from a massive accounting scandal, streamlined its domestic business with thousands of job cuts and pulled back from some international markets. Now Murphy will have to wrestle with a growing UK retail crisis exacerbated by Brexit, the shift to online shopping and competition from discounters Lidl and Aldi.
The 52-year-old Murphy will join the supermarket operator with abundant retail experience. The incoming CEO worked at Boots UK & Ireland before rising to chief commercial officer and president of global brands at the trans-Atlantic drugstore operator formed through a merger.
“We wanted a combination of experience, proven leadership in international retail businesses, a strong strategic mind,” Tesco Chairman John Allan said on a call with reporters.
“Dave will be a hard act to follow, but Ken is unquestionably a seasoned, growth-orientated business leader.”
Tesco shares rose 1.1percent in London, reversing early losses, after the company reported first-half operating profit that beat analysts’ estimates.
Like Lewis, 54, who came to Tesco from Hellmann’s mayonnaise owner Unilever, Murphy has a background in the consumer-goods business. After studying at Harvard Business School, the Irish executive worked at Procter & Gamble Co before joining Walgreens Boots.
At the drugstore operator, Murphy oversaw the opening of a flagship store in Alibaba Group Holding Ltd’s Tmall online retail store in 2018. Later that year he attended the inaugural China International Import Expo in Shanghai, saying it “reflects the Chinese government’s determination and commitment to continue to further open up its market to the world.”
Tesco’s focus has been closer to home of late. After reporting the biggest loss in its century-long history in the wake of the accounting scandal, the company under Lewis leveraged its position as UK grocery market leader to boost profits steadily, even as its market share has continued to erode.
While Lewis’s turnaround is complete, “the bigger question is why Tesco overlooked an array of internal candidates for the new CEO position and have gone outside and appointed Ken Murphy from Boots,” said Nick Bubb, an independent retail analyst.