Tesco (TSCO) boss announces plan to check out next summer

The news overshadowed results, which showed the group making a strong start to the year.

Article updated: 2 October 2019 12:00pm Author: Graham Spooner

  • Ken Murphy set to take over the reins in 2020.
  • Investors will welcome rise in dividend to 2.65 pence.
  • As investors appear unconcerned with change in leadership, we continue to recommend the share as a ‘Hold’.

Results this morning have been overshadowed by the unexpected news that Dave Lewis is stepping down as CEO next year, with Ken Murphy taking over the reins. With the turnaround plan now complete he feels it is the right time for him to leave, with the date set for next summer in order to plan a smooth and orderly succession.

First half revenue met expectations with a 0.6% rise, while adjusted operating profit was slightly ahead at £1.41b. Investors will be pleased to see the dividend has risen to 2.65 pence from 1.67 pence last time around. One of the main areas of focus has been on group margins which have continued to improve to 3.73%, meeting the target of between 3.5% and 4% by 2020.

The group’s outlook highlights a strong start to the year has been made and despite a challenging market they are well positioned to be highly competitive going forward. The shares have gone against the morning trend for markets with a 2% rise.

Our view on Tesco - Hold

Investors appear not to be too concerned with the change at the top and are instead concentrating on the solid results. We continue to recommend the shares as a ‘Hold’ for investors willing to accept a medium level of risk.

If you're looking to invest in the food & drug retail sector and you're not currently a customer of The Share Centre, sign up today. You can also view the full range of food & drug retail companies  and their share prices.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Graham Spooner portrait photo
Graham Spooner

Investment Research Analyst

Graham started out as a fully authorised dealer on the Stock Exchange trading floor and for various banks, before becoming an FCA-approved investment adviser. Now a respected voice in the media, Graham’s share tips and comments on the markets are frequently sought by the national press.