- Q4 Like for Like sales up 0.9%
- Q4 Like for Like volumes up 3.3%
- Full Year like for like sales down 0.7%
Tesco still hold the record for the biggest loss in UK retail history but with these financial results it is clear that Dave Lewis has been busy.
He had more on his to-do list that any of the other Grocers but he has been steadily ticking things off: the accounting scandal, closing Cheshunt head office, selling South Korea division, launched a discount facing sub-brand, created new store flow and merchandising formats, written down capital on undeveloped sites, negated both Asda’s and Sainsbury’s brand matching, and got the business closer to growth.
First and foremost, Lewis has made great strides in getting Tesco closer to its roots, being a good retailer. Selling off peripheral businesses was needed in order to regain focus on the core business and return to growth. Tesco’s decision to continue to divest niche peripheral investments and businesses in the coming months is welcomed, as it recognises where its strengths are, supermarkets.
With that decision to focus the business back to supermarkets, comes the realisation that there is still a very long way to go. They have the biggest space challenge of all the Grocers and have yet to identify anything convincing to fill it with.
The investment into price and price perception still needs to be recovered. The right way to do this is through higher volumes but these are hard to come by in the current market. We are yet to see how Lewis intends to do this. Accepting Sainsbury’s customer’s Brand Match vouchers won’t be it.
The first person to admit that Tesco has more to do is Lewis. Some may criticise the pace of change even for the biggest tanker on the seas, but we challenge that Lewis is now captain of a far steadier ship than the one he took on. Deeper change was needed and that is what Lewis has delivered to date. His leadership has been strong and according to most sources fair. He has promoted wisely and not been shy of facing the unethical practices that were uncovered.
Let’s be clear, the future is not guaranteed to be a shade of rosey for Tesco. A resurgent Morrisons, hungry discounters, a stronger Co-op and Sainsburys holding course all come together to make a marketplace where complacency is very dangerous. Can Tesco return to the profitability of a pre-Clarke era? No, but it can be a highly profitable business in the medium term.