Has supermarket superman David Lewis lost his ability to fly? The Tesco boss, who has overseen an impressive revival at the sector’s big dog, looked at bit more Clark Kent after the latest update.
Tesco managed like-for-like sales growth of just 0.4 per cent for the three months ending 25 May. That figure, excluding the contributions from new openings and the negative impact of the closure of Tesco Direct, represents a sharp slowdown from the 1.7 per cent recorded for the previous quarter.
“We’ve had a strong start to the year,” the CEO boldly declared as he unveiled the number, which on the face of it looked like a case of him over-egging the Tesco Finest creme brulee.
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Retail analyst Nick Bubb was one who raised an eyebrow in response. “Rather over the top,” is how he described the statement, not without justification –because if that’s what Mr Lewis says on the back of 0.4 per cent, what’s he going to come up with if the group starts flying again? “I mean, yowza. We’ve just done 2 per cent and I’m over the moon, baby!”
1/10 No deal, no tariffs
The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers
Getty
2/10 Fingerprint payment
NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user’s fingerprint
NatWest/PA Wire
3/10 Mahabis bust
High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019
Mahabis
4/10 Costa Cola
Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant
PA
5/10 RIP Payday Loans
A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain’s biggest, went into administration on August 30
PA
6/10 Musk irks investors and directors
Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks
Getty
7/10 Jaguar warning
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a “bad” Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks
AFP/Getty
8/10 Spotif-IPO
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn’t issuing shares, but rather, shares held by Spotify’s private investors will be sold
AFP/Getty
9/10 French blue passports
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
10/10 Beast from the east economic impact
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
1/10 No deal, no tariffs
The government has announced that it would slash almost all tariffs in the event of a no-deal Brexit. Notable exceptions include cars and meat, which will see tariffs in place to protect British farmers
Getty
2/10 Fingerprint payment
NatWest is trialling a new bank card that will allow people to touch their hand to the card when paying rather than typing in a PIN number. The card will work by recognising the user’s fingerprint
NatWest/PA Wire
3/10 Mahabis bust
High-end slipper retailer Mahabis has gone into administration. 2 Jan 2019
Mahabis
4/10 Costa Cola
Coca-Cola has paid £3.9bn for Costa Coffee. A cafe chain is a new venture for the global soft drinks giant
PA
5/10 RIP Payday Loans
A funeral procession for payday loans was held in London on September 2. The future of pay day lenders is in doubt after Wonga, Britain’s biggest, went into administration on August 30
PA
6/10 Musk irks investors and directors
Elon Musk has concluded that Tesla will remain public. Investors and company directors were angry at Musk for tweeting unexpectedly that he was considering taking Tesla private and share prices had taken a tumble in the following weeks
Getty
7/10 Jaguar warning
Iconic British car maker Jaguar Land Rover warned on July 5, 2018 that a “bad” Brexit deal could jeopardise planned investment of more than $100 billion, upping corporate pressure as the government heads into crucial talks
AFP/Getty
8/10 Spotif-IPO
Spotify traded publically for the first time on the New York Stock Exchange on Tuesday. However, the company isn’t issuing shares, but rather, shares held by Spotify’s private investors will be sold
AFP/Getty
9/10 French blue passports
The deadline to award a contract to make blue British passports after Brexit has been extended by two weeks following a request by bidder De La Rue. The move comes after anger at the announcement British passports would be produced by Franco-Dutch firm Gemalto when De La Rue’s contract ends in July.
The British firm said Gemalto was chosen only because it undercut the competition, but the UK company also admitted that it was not the cheapest choice in the tendering process.
10/10 Beast from the east economic impact
The Beast from the East wiped £4m off of Flybe’s revenues due to flight cancellations, airport closures and delays, according to the budget airline’s estimates. Flybe said it cancelled 994 flights in the three months to 31 March, compared to 372 in the same period last year.
Well, maybe not.
But while Tesco’s performance was less than stellar, the wheels are hardly falling off the revival he has overseen. For a start, the comparatives were very tough. The weather was warm rather than soggy over the same period in 2018, and both the royal wedding, which some people got terribly excited about, and the World Cup helped to drive sales.
Mr Lewis described the current retail market as “subdued”, something borne out by other data, including the regular Kantar survey of more than 30,000 shoppers from which the researcher derives its market share data.
Its latest missive showed Tesco is outperforming its rivals among the traditional big four supermarket groups despite the tough operating environment. Discounters Aldi and Lidl are still opening new stores wherever they can find suitable premises while Amazon has just extended its same-day delivery partnership with Morrisons, adding five more cities. Further additions are promised. The move sees the pair throwing down a gauntlet to the entire sector. The delivery wars are on.
Against that backdrop, Tesco’s latest numbers might not represent the strong start claimed for them by Mr Lewis. But they do show that the group is holding its own, which helps to explain why the City greeted them with equanimity.
The real fly in the ointment is the cause of that subdued market Mr Lewis referenced, namely Brexit.
Shoppers’ confidence is low in part because they’re starting to get worried about no deal again, and no wonder given the way the Conservative Party is carrying on.
If you want a real scare, pay close attention to what Mr Lewis said about stockpiling. We already know that you can’t do it with fresh food, and we import about half the fresh food we eat. But the reserves of what Tesco could set aside as the last cliff edge loomed have largely been unwound. It’ll be an awful lot harder to repeat the trick ahead of the next one at the end of October, because the warehouses will be full to the rafters ahead of what could be a cold Christmas indeed.
