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New Tesco CEO promises low prices and no strategy change

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
Tesco CEO Ken Murphy on his first day in the job. Photo: Tesco/Ben Stevens/Parsons Media
Tesco CEO Ken Murphy on his first day in the job. Photo: Tesco/Ben Stevens/Parsons Media

New Tesco (TSCO.L) chief executive Ken Murphy has parked his tanks on the lawn of Aldi and Lidl, promising to go toe-to-toe with the German discounters on low prices.

In his first media call with journalists since taking the top job, Murphy vowed to keep Tesco’s prices competitive with rivals as the UK faces a historic recession and the threat of a possible no deal Brexit.

“We are committed to providing value regardless of the circumstances,” Murphy said on Wednesday. “Particularly if we head into a recession — if times get tough — we will be even more focused on value.”

READ MORE: 'Unknown' new Tesco CEO must battle Brexit, German discounters, and changing tastes

Tesco launched an “Aldi Price Match” guarantee in March and said on Wednesday that it had begun to win customers from the German discounter for the first time in a decade, citing data from market research firm Kantar.

Supermarket bosses have warned that prices at the tills could rise if the UK ends the Brexit transition period without a trade deal with the EU. However, Murphy said Tesco would work to keep prices low whatever happened.

“We will maintain a very a sharp focus on price regardless of Brexit,” he said.

Irishman Murphy joined Tesco last Friday, taking over the reins from Dave Lewis who had been in the top job for six years. Murphy, who joined from US healthcare and pharmacy giant Walgreens Alliance Boots, said his first seven days in the job had been a “whirlwind” of meeting staff and visiting stores.

“Tesco has always been a company I’ve admired and I feel privileged to now been part of the team,” he said.

READ MORE: Tesco sales and profits rise despite £533m of COVID-19 costs

While only a week into the job, Murphy suggested he wouldn’t make any major changes to the business.

“You can take it that I’m really happy with the strategy and the direction of the company unless you actually see a changing of the stores,” he told journalists. “As far as I’m concerned, my job is to maintain momentum in the business and keep us focused on delivering a brilliant Christmas.”

Murphy said his predecessor had left the business in “great shape.”

“This is less about me making my mark and much more about Tesco delivering for customers,” he said.

Tesco has recently been pulling back from international markets, selling businesses in Asia and Poland. Murphy said he had no plans to pull back further from central Europe, where Tesco has sizeable operations.

The comments came as Murphy presided over his first result of results in charge of the business. Tesco’s half-year sales rose 6.6% to £26.7bn ($34.4bn) and pre-tax profit jumped 28.7% to £551m.