Tesco CEO Philip Clarke will step down after the supermarket reported another profit warning.
The UK's biggest retailer said in a statement that Dave Lewis, who is president of personal care at Unilever, will become the next boss at Tesco when the outgoing Clarke leaves on October 1.
The company said trading conditions were "more challenging" than anticipated and that sales and trading profit for the first six months of the year were "somewhat below expectations".
Former CIO Clarke, who took over from long-standing CEO Sir Terry Leahy in 2011, has presided over three years of falling sales and more recently faced a series of management clashes.
Tesco share price rose 1.6% in early trading on the news of Clarke's departure and the appointment of Unilever's Lewis.
Clarke's exit marks the second departure of a senior executive in recent months following the news in April that finance chief Laurie McIlwee would leave the struggling retailer.
The two executives reportedly clashed over the direction in which Clarke was taking the supermarket, which has seen falling sales and a loss in market share to discount rivals like Aldi and Lidl.
In a statement this morning the company said that it hoped to reverse Tesco's disappointing sales with "the increasing investments" the supermarket is making to improve "customer offer and build long term loyalty".
"The outlook for the full year will be influenced by the extent to which benefits from the investments we are making begin to be seen; by conditions in the overall market; and by any steps that may be taken during the remainder of the year to improve our customer offer further," Tesco said.
Tesco chairman Sir Richard Broadbent said that Clarke had "guided Tesco through a substantial re-positioning in challenging markets" and it was "the appropriate moment to hand over to a new leader with fresh perspectives and a new profile".
Clarke will stay on as chairman of Tesco's joint venture with CRE in China until early next year, the company said.
It the first time Tesco's has opted for an outsider to take the reins at the supermarket chain. Lewis, but Tesco said he was "already known to many people inside Tesco having worked with the business over many years in his roles at Unilever".
"The board believes that with Dave's leadership Tesco will sustain and improve its leading position in the retail market," the company said.
Lewis, who is famed for his expertise in turnarounds, will receive a basic salary of £1.25 million as well as other benefits. He will also be awarded a golden handshake of £525,000 in lieu of his current year cash bonus from Unilever, and Tesco "restricted" shares.
Clarke will receive his full salary and benefits for the six month to January 2015, as well as a year's salary on departure.