Tesco CEO Dave Lewis steps down as profits rise

Tesco boss Dave Lewis has announced his departure from the business, stepping down from his role as CEO next summer. Ken Murphy, chief commercial officer at Walgreens Boots Alliance, will take up the position on a basic salary of £1.35 million with a 7.5% salary contribution from next year.

Commenting on the surprise move, Lewis said: “My decision to step down as group CEO is a personal one. I believe that the tenure of the CEO should be a finite one and that now is the right time to pass the baton.”

He added: “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. The Tesco brand is stronger and customer satisfaction is the highest it has been for many years. Colleagues are doing an extraordinary job and their expertise shows in every store and channel every day. With these firm foundations and a competitive, sustainable growth strategy in place, I have no doubt that Tesco will kick on again under new leadership next year.”

The announcement came as the retailer revealed a rise in interim profits. Profit before tax increased 6.7% to £494 million for the six months to 24 August, while revenue remained flat, rising a mere 0.1% to £31.9 billion.

Clubcard app users increased 77% year-on-year to 1.54 million, while over 1.5 million customers are now benefitting from Clubcard prices.

The retailer also noted it had made improvements in picking and fulfilment efficiency for its online grocery, with sales increasing 7.4% over the half year compared to a 2.5% lift in the previous six months, driven by increased order numbers and a 3% growth in delivery saver subscribers. Click & collect orders also increased due to dropping minimum basket spend from £40 to £25.

Looking ahead, Tesco said it will aim to double its online capacity in the UK, while three urban fulfilment centres are planned to open by summer 2020, as part of a plan to open over 25 in the next three years.