Tesco Names Halfords’s Davies as U.K. CEO in Turnaround Bid
Tesco Plc (TSCO) named Halfords Group Plc’s Matt Davies as the head of U.K. and Ireland, tasking an executive described as a stickler for service with rebuilding its largest business amid a slump in market share.
The appointment of the 44-year-old, which takes effect in June, is the most significant of Tesco Chief Executive Officer Dave Lewis’s four-month tenure at the troubled grocer. Davies will run a business that accounts for about two-thirds of Tesco’s sales. It has been struggling as shoppers switch to discounters Aldi and Lidl amid complaints of poorly run stores and high prices.
Davies is “highly regarded,” said Exane BNP Paribas analyst John Kershaw. His appointment and other measures announced by Tesco today give “a sense that Lewis is driving genuine change.”
He transformed Halfords in the past two years, driving the shares more than 70 percent higher prior to today, as he revived the company’s digital offer and trained more employees to repair bikes. Davies understood the need for a service-led culture and built a strong management team, making the retailer a more desirable place to work, Halfords Chairman Dennis Millard said today.
“When we were looking for a CEO, Matt hit the middle of the bullseye and I suspect Tesco will feel the same way,” said Millard. With Lewis making public comments about prioritizing service to customers “it almost looked like Matt had written the script.”
At Pets at Home, which he led prior to joining Halfords, Davies more than doubled its number of outlets and earned the company the title as the second-most desirable big company to work for in the country, according to a Sunday Times survey.
At Tesco, Davies takes on the biggest job in the nation’s retail industry. The U.K. business had sales of 43 billion pounds ($65 billion) last year — Halfords had less than a billion. The grocer has forecast the lowest profit in the current year in at least a decade. Lewis today announced the closure of 43 stores, a reduction in overhead costs to improve performance and a “flat” investment in payroll.
Halfords will brief headhunters tomorrow to find a replacement for Davies, Millard said. The CEO will remain at the Redditch, England-based retailer until the end of May, the company said. Millard declined to comment on the company’s performance ahead of a Jan. 21 sales presentation.
Halfords shares fell 33 pence, or 7.1 percent, to 429.5 pence today today in London. Trading for the 13 weeks ending Dec. 26 was strong and in line with management’s expectations, Halfords said in today’s statement.