When he took up the role of Tesco chief executive in September he had every reason to live up to that moniker. Facing a £263m accounting error, a pension hole that has widened to around £4bn and a vast portfolio of costly leasehold properties, he quickly announced a broad-ranging and, yes, drastic, turnaround plan.
Seven months into the job, City analysts have cast him in a new light – less the “drastic”, fast-cutting axe-man, and more the salty captain; a reliable helmsman trusted to navigate Tesco out of the hurricane.
Clive Black, analyst at Shore Black told City A.M.: “Yes, we can expect some pretty awful annual losses tomorrow – a horror show. The losses could be anything from £3-£5bn.
“But how is Dave Lewis doing? In a word, fabulously. There’s no quick fix but he came into a totally dysfunctional situation. With his sense of calm and perspective he’s created the groundwork to give shareholders more optimism.
“The questions that still need answering are; how Tesco will improve trade in the UK; how does he improve the balance sheet and should he launch a rights issue, especially as shares have improved on last year?
“But the ship was pretty heavily rocking when he arrived, and now the waters are calmer. There are headwinds to come but Tesco shareholders should expect the good ship Tesco to sail more smoothly in future.”
Another frequently used nautical term for Lewis’s actions is “clearing the decks”.
Maureen Hinton, group research director at Conlumino, the retail consultancy, suggests that – having done that – Lewis is well-placed to improve Tesco’s fortunes.
“These results will obviously be poor. But if there are no more bad surprises then hopefully the only way is up.
“I think Dave Lewis had to make some fundamental decisions that perhaps he wouldn’t have had to make if the business hadn’t been in such a bad state. That’s an advantage for him because he can make significant changes. It’s not just tinkering.
“I think any new chief executive is likely to make changes. Because of what’s happened when Dave Lewis joined he can be justified in making those big decisions – especially about cost-cutting.
“We’ve already seen signs of improvement in recent trading results. He’s going back to basics. There are lots of issues about properties, pensions and ownership in China, but he comes across as a good person for the role.”
Dave McCarthy, analyst at HSBC, described Lewis as “absolutely the right man for the job”, praising him for being “incisive and decisive enough to make the big decisions.”
Meanwhile City veteran David Buik noted that, despite closing down 0.8 per cent yesterday, Tesco’s fall in share price was surprisingly light last week, when the scale of Tesco’s likely annual loss was flagged up.
“Tesco’s interim results are likely to include a one-off £5bn loss, including write-offs on the closure of 43 stores and 49 projects plus, no doubt, a widening pension hole.... However the shares only fell two per cent, which may be testament to the fact that the market likes the cut of Dave Lewis’s jib – his honesty and forthrightness,” he said.
Yet Lewis, for all his popularity now, faces a huge weight of expectation.
Paul Thomas of consultancy Retail Remedy said: “Having been through turmoil, this report will be clearing the decks.
“Like Dave Potts at Morrisons, he’s all about the shop floor. He has the same mindset that Allan Leighton and Archie Norman had – that shops are king, and head office supports them.
“I think this will be Tesco’s last ‘worst set of results’. The pensions fund and property problems will take longer but Tesco has some great operating principles.
“The first thing any chief does coming into a job is to start with a clean slate. I think Dave Lewis has done that and he knows that this week people will expect and understand bad results. Next time, if they haven’t improved, it would be different, but I think he’ll make sure he puts himself in a position where he’s not having to apologise again.”
Or, as the City’s marine-minded analysts would likely say, there will be a plank to walk.