Tesco’s staff must shudder every time the chief executive, Dave Lewis, talks about making the business “simpler”. It usually means a few thousand people are about to lose their jobs. In the latest effort to create “a simpler, more sustainable” Tesco, some 9,000 roles will be “impacted”, which is going some even by Lewis’s standards. He is estimated to have cut about 10,000 jobs during his four years in charge, so the pace of cost-cutting seems to be accelerating.
The official goal, as ever, is to create financial headroom to “invest in serving our customers” but you have to wonder how the cause will be advanced by removing meat, fish and deli counters from 90 stores and switching an unspecified number of others to a “flexible offer”, whatever that means.
If too few customers are using the things, redeploy the space for something else, runs the thinking. Well, yes, there’s a brutal logic to the plan. But blander is not necessarily better. Tesco is the biggest supermarket chain in the land and has the greatest buying power. A portion of customers expect its stores – at least the big ones – to offer more than a version of Aldi and Lidl’s no-frills approach. Morrisons, which tries to make a virtue of its meat and fish counters, will be delighted by Tesco’s semi-retreat, one suspects. It’s got another point of differentiation.
Drastic Dave is not for turning, clearly. He has got to keep the profit margin promises he’s made to the City and the grumble about the market being “competitive and challenging” obviously has force. But it is hard to believe Lewis, when he set out his turnaround plans in 2015, intended still to be swinging the axe so vigorously in 2019. In that respect, the financial revival of Tesco has been a disappointment, which is roughly what the share price says. Within a few pennies, it is where it was when the £4m-a-year boss arrived to save the day.
Flybe shareholders deserve answers
Simon Laffin will have annoyed many investors during his stint as chairman of Flybe. The share price has plummeted on his five-year watch and he intends his final act to be a sale of the regional airline for just 1p-a-share, or £2m, to a consortium led by Virgin Atlantic.
Investors’ mood will not have improved after the twist to the deal a fortnight ago. Instead of giving shareholders a meaningful vote on the takeover, Laffin & co agreed to flog the core assets to the Virgin consortium at the same price. The manoeuvre was technically legitimate but will have felt unfair.
In the circumstances, it is no surprise that Hosking Partners, with a 19% stake, thinks it’s time to drop the pilot and install the airline veteran Eric Kohn to inspect Laffin’s handiwork. It wants shareholders to vote and probably stands a good chance of attracting support.
A gamechanger for Flybe’s suffering investors? Well, no. Shareholders meetings do not have to happen immediately and Flybe is allowed to string things out until March, beyond the 22 February “longstop” date for completing the asset disposal. By that stage, a vote may have little practical impact.
Yet it is not entirely pointless. As argued here a fortnight ago, the cut-price deal with the Virgin crew was probably defensible: if there was a risk of collapse, the board had to put the interests of staff, customers and pensioners first. But a correct deal at the eleventh hour does not explain why Flybe waited so long to put itself up for sale. On that score, the shareholders still deserve a proper answer.
Retailers leave it late to shout out over Brexit
A no-deal Brexit would lead to higher prices in supermarkets and “significant” supply-chain disruption in the short-term, agree the chief executives of Asda, the Co-op, Lidl, Marks & Spencer, Sainsbury’s, Waitrose and others. The forecasts, set out in a letter to MPs, sound entirely plausible. But they have also arrived late in the day.
In private, many of the same individuals have made even starker warnings for ages. Why wait to go public? And why huddle together under a group letter, which tends to lessen the impact? The answer is the corporate fear of going out of a limb.
It’s a shame. A lesson from the industry frontline in WTO tariffs, and their potential “devastating” effect on UK farming, would have been welcome many months ago. The grocery chiefs should have taken a lesson from Airbus. Shout early and often.