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Tesco To Cut Stores and Jobs In Revival Plan

Written By Unknown on Jumat, 09 Januari 2015 | 12.07

Tesco has confirmed it is to close 43 unprofitable UK stores and halt construction on almost 50 others as part of a plan to revive its fortunes.

In the wake of four profit warnings last year and the accounting scandal which saw group chief executive Dave Lewis take charge of the UK business, Tesco said it had enjoyed a good Christmas.

Like-for-like sales fell just 0.3% in the six weeks over Christmas - better than analysts predicted - although like-for-like sales in its third quarter were down 2.9%.

But Tesco's sales woes - a result of a lack of focus on its core store offering in the past and the strong challenge from discounters - are only part of the problem for Mr Lewis.

He used the trading update to confirm a number of changes in order to ensure no repeat of the £263m profit over-statement - including new guidelines for supplier negotiations - and outlined plans to streamline the business.

Its head office in Cheshunt is to close in 2016 while it confirmed the sale of Tesco Broadband and Blinkbox, the video steaming service, to TalkTalk.

Options were being explored for Dunnhumby, the unit which manages its Clubcard loyalty scheme, signalling a likely sale process which could value it at up to £2bn.

Tesco did not disclose the locations of the 43 stores to close but Mr Lewis revealed that a "significant proportion" would be Tesco Express convenience shops.

Mr Lewis told Sky News: "It will be a process which is very individual. This is something that happens on a store by store basis.

"That's where the consulation starts today and that's what you'll see happen progressively over the next few months.

"We've made some decisions on parts of the portfolio, be it Blinkbox, be it broadband but also on Dunnhumby.

"I'm repeating what I said when we had our first conversation in October. I'm looking at all of the assets of the group, I've got a full review ongoing.

"I'm very clear that we've got too much leverage in the business, too much debt in the business, and I need to do something about that."

Changes to store management and working-hour flexibility structures would deliver savings of £230m annually but result in a one-off cost of £300m, Tesco said.

It also plans to close its final salary pension scheme but said colleagues would soon be offered turnaround-based bonuses.

Tesco confirmed too that it had poached Halfords boss Matt Davies to run the UK business but he would not be able to start work until 1 June.

The announcements were cheered by investors, with Tesco's share price - having taken a battering last year - up almost 14% on the FTSE 100 in early afternoon trading.

Sainsbury's and Morrisons also saw their values shoot up but Halfords lost more than 5% on news of Mr Davies' departure.

On the shop floor, Tesco joined the New Year price war with major rivals by cutting prices from today on hundreds of branded products.

It said the move, resulting in average savings of 25% on brands such as Hovis, Coca-Cola, Marmite and Tetley, was a response to "demands from customers for simpler, lower and more stable prices."

Commenting on the Christmas sales performance, Mr Lewis said: "We are seeing the benefits of listening to our customers.

"In difficult circumstances the team has begun the challenging task of reinvigorating our business. There is more to do but we have taken the first important steps in the right direction.

"Our recent performance gives us confidence that when we pull together and put the customer first we can deliver the right results."


12.07 | 0 komentar | Read More

Morrisons On The Run With Athletics Deal

By Mark Kleinman, City Editor

The UK's fourth-biggest supermarket chain will announce on Friday that it is to take over from Bupa as the long-standing sponsor of the Great North Run.

Sky News understands that Wm Morrison has agreed a multimillion pound deal to become the headline sponsor of more than a dozen running events across Britain.

The four-year contract is designed to promote Morrisons' brand and association with healthy living at a time of intense competition in the UK grocery sector.

The biggest sports sponsorship in Morrisons' history, it will commence this weekend with the Great Winter Run in Edinburgh.

Sources said the company's chief executive, Dalton Phillips, viewed the deal as a valuable marketing platform as Morrisons finds itself fighting discounters Aldi and Lidl and established rivals such as Tesco, Asda and Sainsbury's.

Tesco shares soared on Thursday as its new boss, Dave Lewis, outlined a plan to return the company to growth, including cutting the prices of hundreds of branded food items.

Shareholders responded by pushing up the value of Tesco's listed peers, with Morrisons' shares rising by almost 8%.

Morrisons will update the City next week on its Christmas trading performance, when its board is expected to ask Andrew Higginson, its chairman-designate, to take the reins immediately.

Last year, the company announced that it was axing thousands of jobs in order to cut costs, and introduced a price-matching scheme and loyalty card in the latest salvo in the sector's price war.

Morrisons hopes that sponsoring the televised series of running events will be valuable ammunition in the battle for shoppers' attention.

The rights to the Great Runs series are held by Nova International, a private company chaired by Brendan Foster, the former British Olympic medallist.

Morrisons declined to comment on Thursday.


12.07 | 0 komentar | Read More

Euro Area Enters Deflation As Oil Costs Fall

Written By Unknown on Kamis, 08 Januari 2015 | 12.06

The eurozone has officially entered deflation, with tumbling oil costs tipping the currency towards its latest crisis.

Eurostat, the EU's statistics agency, said prices in what was then the 18-country euro area were 0.2% lower in December than the previous year.

It was the first time inflation had entered negative territory in the zone since the height of the financial crisis.

The main reason behind the slide from the 0.3% inflation rate recorded in November was the plunging oil price, which is being passed on to motorists at the fuel pumps.

The Eurostat figures suggested that if energy costs were stripped out, eurozone inflation would be running at 0.6%.

The decline in the headline rate was bigger than anticipated and likely to cement expectations that the European Central Bank (ECB) will soon implement a more aggressive monetary stimulus to boost economic activity.

ECB president Mario Draghi is tipped to kick-start a programme of quantitative easing later this month, though the snap general election in Greece may force him to delay.

Greek 10-year bond yields - the cost to its government of servicing debts - climbed above 10% for the first time since September 2013 in the wake of the negative inflation announcement on growing fears the country will be leaving the eurozone.

The main problem with deflation is the fact that consumers and firms hold off making purchases believing prices will be cheaper at a later date, damaging output, jobs and therefore sowing the seeds of recession.

Deflation dogged the Japanese economy for decades and economists say it remains the biggest threat to recovery in the euro area which is the UK's biggest trading partner.

Head of research of the economic think-tank the Adam Smith Institute, Ben Southwood, said: "Eurozone deflation needs to be stopped as soon as possible to forestall a return to the darkest days of the crisis.

"The ECB must act now - easing monetary policy by buying bonds - or, even better, changing their whole regime and targeting the price level, or even nominal GDP, instead of inflation.


12.06 | 0 komentar | Read More

City Awaits Tesco Chief's Turnaround Plan

By Mark Kleinman, City Editor

The new chief executive of Tesco will set out a blueprint to revive its fortunes through a string of measures including the appointment of a new boss of its UK operations.

The plans unveiled by Dave Lewis, who joined the UK's biggest retailer last September, will face intense scrutiny in the City as investors assess its prospects for recovering from a slump in profits and an accounting scandal which saw profits overstated by £263m.

Sky News has learnt that Mr Lewis will announce that Tesco is selling its Blinkbox media business to TalkTalk for just £5m, a small fraction of the money splurged on the loss-making division it acquired in 2011.

The UK's biggest retailer will also say that it believes there are more appropriate owners for Dunnhumby, the unit which manages its Clubcard loyalty scheme, signalling a likely sale process which could value it at up to £2bn.

WPP Group, the marketing services giant, and private equity firms Advent and TPG have already expressed interest in buying Dunnhumby.

Sources confirmed that Mr Lewis will also announce plans to save hundreds of millions of pounds annually by cutting head office costs, which will trigger significant job cuts, as well as closing its final salary pension scheme.

Another key element of Tesco's transformation plan will be Mr Lewis's recruitment of a leading retail executive to run the core UK business.

One executive named as a potential candidate on Wednesday night was Ian McLeod, the commercial director of Australian retailer Wesfarmers and a former Asda executive.

Mr Lewis is unlikely to announce any plans relating to the future of Tesco's Asian or European operations, or its banking arm, sources said.

However, one piece of positive news is likely to emerge in the shape of Tesco's trading performance during December.

While the company's overall third-quarter sales are understood to have been sluggish, one adviser to Tesco said its Christmas sales had given Mr Lewis "cause for optimism".

The new chief executive is under intense pressure to deliver rapid evidence that the UK business can win back customers who have defected to discounters such as Aldi and Lidl.

He is expected to announce significant price-cutting plans, echoing moves in recent days by rivals Asda and J Sainsbury.

Mr Lewis took over from Philip Clarke, who was sacked last summer after presiding over a disastrous three-year period.

A series of profit warnings last year led Tesco to say in December that trading profit would not exceed £1.4bn for the full year ending February 2015.

The Serious Fraud Office and Financial Reporting Council are probing Tesco's profit overstatement, with a number of the grocer's executives having left or still under suspension.

The inquiries relate to payments from suppliers, with Mr Lewis set to announce new arrangements in the coming months.

Tesco declined to comment.


12.06 | 0 komentar | Read More

Supermarket Wars: Price Cuts Revealed

Written By Unknown on Rabu, 07 Januari 2015 | 12.06

Sainsbury's and Asda have announced details of price cuts as their rival Tesco prepares to unveil its turnaround plan.

Asda was first to confirm it was making £300m in customer savings during the first three months of the year, saying it was part of a previously announced £1bn drive to help it close the gap with hard discounters which have been eating away at the dominance of the 'Big Four' chains.

Asda, which reported its worst quarterly sales performance in nearly a decade in November, said the cost of 2,500 "essentials" would fall.

Sainsbury's later said it was to implement price cuts on 1,000 of its most popular products, costing it £150m, and customers would see more than 700 new regular prices in supermarkets this week.

Both chains, along with market leader Tesco and Morrisons, have seen customers drip away to the likes of Aldi and Lidl at the lower end of the price spectrum while Waitrose has captured some of the better off.

Asda's chief merchandising officer for food, Barry Williams, said: "After a great Christmas with the family, January is the month we all start looking at the size of our waists and our wallets.

"We're going further than ever before, rolling back those every day, can't live without items at a bigger percentage than we've ever been able to do previously.

"With hundreds of products at 50p, and even more at 15% less than normal, we're aiming to make a big difference for families in their weekly shop."

Sainsbury's chief executive Mike Coupe said: "We are investing £150m per year for the next three years in some of our customers' most popular purchases, with a total of 1,000 prices cut since we announced this investment in November.

"This will come as welcome news to customers who might be feeling the pinch after Christmas.

"These lower everyday prices are a part of our ongoing commitment to offering our customers great quality products at great prices."

The announcements were made less than 48-hours before Tesco's chief executive was expected to outline a recovery plan for its UK business.

While its supermarkets remain the dominant force in the grocery market, Tesco was slow to counter the discount threat and it has since lost further market value as a result of its £263m profits overstatement, which remains the subject of several investigations.


12.06 | 0 komentar | Read More

Barclays’ 'Bad Bank' Chief To Step Down

By Mark Kleinman, City Editor

The executive in charge of a Barclays division housing billions of pounds of underperforming assets is to step down.

Sky News has learnt that Eric Bommensath, who was previously the co-head of Barclays' investment banking operation, is to retire later this year.

His departure, which is expected to be announced on Wednesday, will come eight months after he was placed in charge of Barclays Non-Core, a new unit set up to manage £110bn of risk-weighted assets (RWAs).

The creation of the division was a core element of a plan unveiled last year by Antony Jenkins, Barclays' chief executive, to reshape the group's sprawling structure in an attempt to improve financial returns.

Since the 'bad bank' was set up, the level of RWAs inside it has been significantly reduced, to £88bn at Barclays' half-year results and £81bn at the end of the third quarter.

That figure will be lower still at the end of the first quarter of this year following the completion of the sale of Barclays' Spanish retail operations last week.

The sale incurred a substantial loss but underlined Mr Jenkins' determination to exert a firmer grip on operations which have failed to produce satisfactory results.

Mr Bommensath, who has been at Barclays for 17 years, is expected to be replaced by two other executives within the bank's non-core unit, John Mahon and Harry Harrison.

He is understood to have decided to leave after establishing a firm path for the division.

Barclays will be the last of the big UK lenders to report their results for 2014 when it announces its full-year earnings on March 3.

The bank's overall performance has been steadily improving under Mr Jenkins, who replaced Bob Diamond in the wake of the Libor rate-rigging scandal in the autumn of 2012.

However, it continues to face a number of regulatory headwinds, including a joint settlement with US, UK and Swiss authorities over systems and control failings in its foreign exchange-trading operations.

A number of other banks, including HSBC and Royal Bank of Scotland, paid more than £1bn under an agreement with the City watchdog last November, with Barclays expected to reach a settlement in the next two months.

For the first time, Barclays plans to publish its annual report, containing comprehensive disclosures on remuneration, on the same day as its annual results.

Barclays declined to comment on the planned changes to the leadership of its non-core division.


12.06 | 0 komentar | Read More
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