Following today’s release of Tesco H1 figures for FY2019/20, Thomas Brereton, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Amid a set of reasonable H1 results, which saw UK & ROI sales rise marginally to £22.4bn and profits leaping 28.4% to £1,085m, CEO Dave Lewis has announced his exit for summer 2020 – to be succeeded by CCO of Walgreens Boots Alliance Ken Murphy – citing personal reasons and that “the Tesco turnaround has been delivered”. With Tesco’s impressive l-f-l sales growth overshadowing the UK grocery market for the majority of the last 18 months, Lewis is certainly positioned to leave on a high, and although these H1 results mark a small dip in form (compared, for example, to a rapidly recovering Sainsbury’s), Lewis’s impressive legacy is set to be one of consistent profitable improvement over a challenging five-year period for the market leader.
“Outside of the personnel change at the top, Tesco’s performance over the six month period has been very much as expected, with a disappointing performance in Central Europe (sales down 7.0%) largely offset by a burgeoning Asian market (+8.4%) and middling growth in the UK & ROI (compared to overall grocery market). Going forward, Tesco has outlined clear plans for its UK business that fall in line with the high-growth channels in the grocery sector, planning to open 150 convenience stores over the next three years as well as double its online capacity. Meanwhile, star performer Booker has announced the acquisition of food distribution specialist Best Food Logistics, adding yet another arm to Tesco’s sprawling non-retail operations. While some of Tesco’s trials have appeared to underperform – with yet another set of results failing to indicate sales performance at 10-store discounter fascia Jack’s – this focus on convenience and online is a perfectly rational plan to adapt to changes in consumer habits.
“Murphy will need to hit the ground running when he arrives in mid-2020. Although the Brexit haze should have cleared by then, Tesco – along with the rest of the sector – will likely be still experiencing a hangover caused by the disruption. The challenge for Murphy will then be transitioning Tesco to a market-leading innovator without damaging the steadfast, profit-generating machine it has become under Dave Lewis.”