Tesco PLC (LON:TSCO) will have a new CEO starting Monday—a month earlier than previously announced. Dave Lewis, a former Unilever plc (ADR) (NYSE:UL) (LON:ULVR) executive, will have his hands full when he starts at Tesco next week.
Tesco warns about profits again
The company had previously announced that Lewis would be taking the reins. He does so at a time when Tesco is struggling to stay afloat. Earlier today, the company again warned investors about profits. It’s the second time in six weeks.
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Now the company said it expects full year trading profits to be between £2.4 billion and £2.5 billion. Tesco said analysts had been projecting profits of between £2.7 billion and £2.8 billion. As a result of the lower than expected profit, the company also reduced its interim dividend 75% and announced that it will cut capital expenditures by $664 million.
Apparently Lewis, along with Tesco’s board, decided to release all the bad news before he took over the company, according to unnamed sources cited by The Wall Street Journal. Technically, Lewis still works for Unilever, and the newspaper’s sources said that over the last month, he has been working weekends for Tesco to try to get things under control there.
Tesco’s other problems
Lewis faces a never-ending strand of problems at the company, as he will have to wait until December to get a finance director. At that time, Alan Stewart will take over the position. Stewart currently is with Marks and Spencer Group Plc (LON:MKS), a competitor of Tesco. A spokesperson reportedly said they don’t have any plans to bring Stewart in any sooner than previously announced.
The U.K.-based retailer appointed Lewis to replace CEO Philip Clarke last month, the same day it reported that profits for the first half of its fiscal year would be lower than expected. Tesco has issued two profit warnings under Clarke’s three-year tenure as CEO. Clarke’s last day with Tesco is today.
Lewis had widely been seen as being a potential successor to Unilever CEO Paul Polman, so losing him is a major blow for the company. However, the split has reportedly been a civil one, as Polman said he had been meeting with Lewis to give him advice about advancing to the CEO position.