Chief executives usually cling to their multi-million pound jobs with limpet-like tenacity, but in supermarket parlance, Dave Lewis is quitting Tesco while he’s well within his sell-by date.
‘I spoke to the chairman John Allan a year ago about making the change,’ Lewis told me yesterday.
‘He was regretful, he would have liked me to stay longer, but he understands.’ It’s not surprising Allan was reluctant to part with his chief executive.
Drastic action: Dave Lewis has restored Tesco from a bombed-out wreck with a £6.4bn loss and accounting black hole to a thriving business, making profits of more than £1bn a year
Lewis has restored Tesco from a bombed-out wreck with a £6.4billion loss and accounting black hole to a thriving business, making profits of more than £1billion a year.
When he landed at the shell-shocked grocer, which celebrates its 100th anniversary this year, figures like that were a pipe dream. It is thanks to him that the centenary is a celebration and not a wake.
A lesser executive could easily have failed. To have achieved the transformation in such a tough environment for retailers is all the more impressive.
At the nadir for Tesco, rivals gloated over the downfall of a company that had lorded it over the High Street then fallen victim to its own arrogance.
It was vilified as a ‘Tescopoly’ that trampled over suppliers, blighted the land with ugly superstores and put small High Street shops out of business.
The real damage was done by Lewis’s immediate predecessor, Phil Clarke, who was fixated on maximising profits no matter what the cost to suppliers, customers or ordinary staff.
Lewis drew up a six-point recovery plan including rebuilding the brand, cutting costs and improving profit margins.
Lewis dislikes his ‘Drastic Dave’ nickname – ‘no-one I have worked with has called me that,’ he says – and the implication he is a slash and burn merchant is wide of the mark. It’s true thousands of jobs have been cut, but many staff have been redeployed.
As he points out, there are still around 222,000 staff helping customers in stores today, the same number as when he arrived in the autumn of 2014.
Transformation: Lewis drew up a six-point recovery plan including rebuilding the brand, cutting costs and improving profit margins.
His takeover of wholesaler Booker in a £4billion deal last year has, he says, added £800million of sales and he set up discount chain Jack’s to compete with Aldi and Lidl.
‘By the time I leave next summer I will have been here six years,’ he says.
‘I was brought in to lead the turnaround and I have delivered on all my targets. We have put down some really good plans for what we do next, but delivering that is a five-year job and for me it is too long.’
Growth is back on the agenda. Lewis says the plan is to open 150 Express convenience outlets in the next three years along with four new superstores.
There will be a major expansion online and the first major overseas expansion since the meltdown with 750 stores in Thailand.
A phase of the loyalty scheme, Clubcard Plus, will be launched at the end of 2019, giving discount deals in return for a £7.99 a month fee.
Lewis certainly seems to be leaving on a high note. But it’s dangerous to praise any chief executive – even if their performance looks brilliant, you never quite know if they have left behind any unexploded bombs.
One disappointment is that the success of the rescue is not fully reflected in the share price. It has risen 38 per cent since he joined but has not regained its pre-meltdown levels.
‘I can’t control the share price but it has shown good growth in the current environment. We weren’t paying a dividend when I joined and today we will end up paying £750million to shareholders,’ he says.
Another note of caution is that although the half-year results were well-received, UK sales are slightly down.
And Lewis’s decision to leave at the relatively young age of 54, without another big job lined up, is sufficiently unusual to arouse suspicions that there might be more to it, though there doesn’t seem to be.
At that age, he could have several big jobs left in him at private equity or an online retailer such as Amazon, and there is a need for a turnaround wizard at M&S.
He says he will not work at another food retailer, which would rule out a similar turnaround job at Sainsbury’s. Whatever he does, he leaves behind big shoes to fill.
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