News of Tesco’s impressive recover dominates business coverage in today’s papers. The Telegraph notes that Tesco has restored its dividend for the first time since the accounting scandal of 2014. The 1p dividend showed CEO Dave Lewis’ confidence in the turnaround plan. The Financial Times adds that first-half sales of £28.3bn was at the top end of analyst forecasts, with a 2.2% increase in same-store sales in the second quarter putting it on course for a second year of like-for-like growth following a seven-year streak in which it ceded ground. The Mail says Tesco’s strategy of keeping prices low amid Brexit-fuelled inflation has paid off as underlying operating profits surged 21.1% to £471m. The Times calls the results a “symbolic” moment for a company that three years ago was reeling from an accountancy scandal and market downturn. Another article in The Financial Times writes that the Tesco chief has reaped harvest with a focus on food as the once-sprawling empire has become a focused retailer praised by its suppliers.
Lombard in The Financial Times has some handy tips for understanding the group’s latest results as it says “Tesco’s self-help pays dividends as it avoids drastic distractions”. Ben Marlow asks in a Telegraph column if it’s a case of job done for Drastic Dave? Not quite, he says.
The Guardian writes that Tesco has no plans to drop the Willow Farms poultry brand from its shelves despite the furore over poor hygiene at the processing plant where it is made, following an undercover investigation of 2 Sisters by the paper and ITV. The Guardianbusiness editor Nils Pratley examines why the recovery at the supermarket hasn’t fed through to the share price. He says the turnaround packaging is “nice” but the contents are the same. “Is the great corporate turnaround at Tesco as phoney as the farm brands that replaced various own-label ranges?,” Pratley asks. “A glance at the share price would suggest so.”
The Times also has an article focusing on the food safety concern as Dave Lewis was forced to defend Tesco’s monitoring of food safety standards at meat plants owned by 2 Sisters. Lewis said that Tesco’s investigators had “not had the wool pulled over their eyes” when conducting six audits of 2 Sisters’ facilities this year which uncovered no breaches of regulations.
The Times focuses on the Tesco pension deficit and notes that the supermarket used an “accounting ruse” to cut the deficit in its fund by £3bn. The paper writes that changes to the assumptions about future investment returns cut Tesco’s estimated pension deficit by £1.77bn, while an adjustment to assumptions about workers’ life expectancy cut it by another £1.32bn.
In the ongoing Tesco trial a senior accountant who alerted the retailer to a £250m accounting scandal told a London jury of the increasing “pressure” and “anxiety” faced by those working for the retailer in 2014 as its food business performance deteriorated (The Financial Times). The Times adds that the whistleblower said that a commercial director had told the company’s UK boss Christopher Bush in a meeting that he was worried about being sent to prison a month before the company restated its 2014 interim profits. The whistleblower also told the court that the difference between profit target and actual profits looked “insurmountable” (The Guardian).
The co-founder of convenience store chain McColls, James Lancaster, has stepped down from the board and sold his entire remaining stake for £33.6m as he gears up to lead a rescue of embattled wholesaler Palmer & Harvey (The Telegraph). Read The Grocer story here.
PepsiCo posted modestly worse-than-forecast sales in the third quarter on slowing demand for soda and pressure on the US food industry in recent months (The Financial Times). The group reported net revenues up 1.3% to $16.24bn in the three months to mid-September, with net income up to $2.14bn from $2bn. The Times says Pepsico feels the chill as Americans sour on sugary drinks, with as drink sales in the region during the third quarter falling for the first time in two years.
Diageo is seeking a development partner to help turn part of its flagship St James’s Gate Guinness brewery in Dublin into offices, shops and homes (The Telegraph). Diageo unveiled preliminary plans on Wednesday for the five-hectare (12.6 acre) development within the St James’s Gate brewery site, which includes the first Guinness vat house, built in 1798, and Brewery Room No 2, the biggest brewhouse in the world during the early 20th century (The Guardian).
The EU has ordered Amazon to pay €250m (£220m) to Luxembourg after receiving years of ‘illegal tax treatment’, The Telegraph reports. Luxembourg hit back at an EU ruling that it must recover €250m in “illegal tax benefits” it granted Amazon in a sweetheart deal, insisting that its actions were legal at the time the arrangement was made, The Times adds.
Mauritius sugar growers are hoping for success in the rum industry as changes to European sugar quotas give distilleries a taste for global markets (The Financial Times).
The Trump administration has joined a group of countries objecting to a deal between the UK and EU to divide valuable agricultural import quotas, in a sign of how the US and others plan to use Brexit to force the UK to further open its sensitive market for farm products, The Financial Times writes.