After his first performance in the City today, Tesco’s Ken Murphy was being called the Irish Sphinx.
Asked what his strategy will be, he repeatedly offered not a hint, merely trotting out well-rehearsed lines on giving great service, delivering value, blah blah blah.
In fairness, he’s only been in place for a week. But there’s a bigger issue here; given the numbers he delivered today, it’s not altogether clear what he can do to improve matters.
For Tesco, revived from the critical ward by Dave Lewis, is a truly impressive machine.
It didn’t just cope with Covid-19; it thrived. It smoothly doubled its online delivery capacity, benefited from people’s switch to weekly, out-of-town shops and helped rivals’ crisis response with Booker’s logistics skills.
Bar Tesco Bank (ditch it, Ken), there’s not much to fix at this retail Rolls-Royce. A spit and polish job, really. Most of Murphy’s elbow grease will be applied to online, which is growing at such a lick that hiccups will be hard to avoid. So far, it’s been smooth, but somehow he has to maintain and boost profitability in this notoriously costly sales channel, just as recession-bound shoppers get more price sensitive.
Again, things are going in the right direction. Bigger average shops mean its vans deliver more goods to fewer addresses; cheaper click and collect is growing. But as more fulfilment centres and urban warehouses are needed, much can go wrong.
Lewis got margins to a healthy 4.2%. With recession, Brexit and Covid lockdowns, that’s the number to listen out for when Murphy starts talking.
