City Awaits Tesco Chief's Turnaround Plan

Written By Unknown on Kamis, 08 Januari 2015 | 11.46

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.


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