Dave Lewis, the boss of Tesco, has decided to quit the supermarket he has led since September 2014.
He will be replaced by Boots lifer Ken Murphy after claiming the grocer’s turnaround is “complete”.
Mr Lewis said: “My decision to step down as group CEO is a personal one.
“I believe that the tenure of the CEO should be a finite one and that now is the right time to pass the baton.
“Our turnaround is complete, we have delivered all the metrics we set for ourselves. The leadership team is very strong, our strategy is clear and it is delivering.”
He added that there is no new job lined up and he intends to take a break from work to decide what to do next.
Mr Lewis said: “I’m going to step back and have a think about what I want to do next with my family. I’m 54 years old and I’m going to sit back and think where I can make the best contribution.”
The former Unilever executive, who joined Tesco in 2014 and quickly uncovered a major accounting scandal that led to a settlement with the Serious Fraud Office, added he has worked with Mr Murphy during his previous job.
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Asked what advice he would have for the new chief executive, Mr Lewis said: “Respect the expertise that exists within the business. Use your ears more than your mouth.”
Mr Murphy has spent his career with high-street chain Boots – first with Alliance Unichem, then Boots.
He was joint chief operating officer at Boots UK and Ireland before rising to executive vice president, chief commercial officer and president of global brands at Walgreens Boots Alliance.
His basic salary will be £1.35 million a year with pension contributions of 7.5%.
Tesco chairman John Allan defended the 8% pay rise in a year of major restructuring and redundancies at the supermarket, pointing out that Mr Lewis has not taken a pay rise since he joined.
He also explained that the pension contribution fall for Mr Murphy came after shareholders raised concerns that Mr Lewis’s pension contribution was far higher than typical staff.
The chairman said: “Dave’s pension contribution was entirely normal and appropriate when he joined the business… We have responded to that (shareholder concern), so in that sense you can offset that against the modest increase in salary.”
He added that highly-rated Booker chief executive and former Tesco UK boss Charles Wilson was approached for the role, but declined.
Mr Lewis explained: “We had that career conversation with Charles. He was very clear with both of us, whilst he is fit and well he did not want to be considered a successor to myself.”
UK and Ireland sales were up 0.1% on a like-for-like basis, but internationally there were falls in sales – with a drop of 3.1% in central Europe and a 1.3% fall in Asia.
Mr Lewis also revealed online sales are increasing following an upgrade to its picking abilities – rising 7.4% over the period compared with a year ago – and will open three new urban fulfilment centres by next summer.
Winning over more customers is front and centre of his mind, and the boss also unveiled Clubcard Plus and Tesco is speeding up its Express store openings, with 150 opening in the next three years, and four new superstores.
On its wholesale division, which runs under the Booker brand, the company announced it was buying rival Best Food Logistics.