The shock news comes as Tesco reported a 6.7% rise in first-half profits to £494m.
Tesco boss Dave Lewis will step down next summer after completing the turnaround of Britain’s biggest retailer. He will be replaced by Ken Murphy, who has held senior positions at the owner of chemist chain Boots.
Celebrating its 100th anniversary, Tesco, which has a 27.4% share of Britain’s grocery market, is in the final stages of a recovery plan that Dave instigated after a 2014 accounting scandal followed a dramatic downturn in the company’s fortunes. Dave’s departure was announced as Tesco reported a 6.7% rise in first-half profits to £494m. The group has met the majority of its turnaround goals, including a key margin target of earning between 3.5 pence and 4 pence of operating profit for every pound customers spend.
“With the turnaround complete and as we begin to implement the next steps of our sustainable growth strategy, now is the right time to plan a smooth and orderly succession,” Dave, who joined Tesco from Unilever in 2014, said on Wednesday. “As such, I will step down as group CEO next summer and pass the baton to Ken Murphy.”
Tesco chairman John Allan said he had accepted the resignation with regret.
Dave is responsible for overhauling Tesco’s relationship with suppliers, lowering prices versus competitors, simplifying product ranges and improving store standards since taking charge. Jobs have also been cut, including 4,500 announced in August. He has also pursued growth by buying wholesaler Booker, forming a global purchasing alliance with Carrefour and launching new discount format Jack’s.
His successor was joint chief operating officer at Boots UK & Ireland before rising to executive vice president, chief commercial officer and president global brands at Walgreens Boots Alliance. Ken left his executive position at the US retailer at the end of 2018 but retained a consultancy role, Tesco said.