Talking Shop

Talking shop

Alison Horner

Alison Horner
Group Personnel Director

Amanda Sankey

Amanda Sankey
Product Development Manager

Andrew Boyle

Andrew Boyle
Development Project Manager

Andrew Yaxley

Andrew Yaxley
Managing Director, London

Angela Porter

Angela Porter
Head of Brand Advertising

Barbara Young

Barbara Young
Chief Executive, Diabetes UK

Beatrice Forrester

Beatrice Forrester
Trainee Buyer

Benny Higgins

Benny Higgins
CEO Tesco Bank

Chris Bush

Chris Bush
Managing Director, UK

Dan Jago

Dan Jago
UK & Group Wine Director

David Wood

David Wood
UK Marketing Director

Derek Lawlor

Derek Lawlor
Category Director (Meat, Fish & Poultry)

Gerry Gray

Gerry Gray
UK Operations Director

Helen Dwyer

Helen Dwyer
Buying Manager

Jill Easterbrook

Jill Easterbrook
Managing Director - Developing Businesses

John Christie

John Christie
CEO Tesco Lotus

John Scouler

John Scouler
Food Commercial Director

Judith Nelson

Judith Nelson
UK Personnel Director

Ken Towle

Ken Towle
Managing Director of Central Europe and Turkey

Kevin Grace

Kevin Grace
Group Commercial Director

Laura Jewell

Laura Jewell
Product Development Manager

Lindsay Boswell

Lindsay Boswell
CEO FareShare

Luke Hickton

Luke Hickton
Innovation Team

Luke Vinogradov

Luke Vinogradov
Mobile Experience Director

Matt Atkinson

Matt Atkinson
Chief Marketing Officer

Michael Kissman

Michael Kissman
UK Communications Director

Mike Baess

Mike Baess
Tesco Food Writer

Mike McNamara

Mike McNamara
Chief Information Officer

Paul Jones

Paul Jones
Head of Design

Paul Morris

Paul Morris
Customer Communications Director, UK Marketing

Paul Ritchie

Paul Ritchie
CEO Tesco China

Paul Wilkinson

Paul Wilkinson
Innovation Ambassador

Philip Clarke

Philip Clarke
Group Chief Executive

Pornpen Nartpiriyarat

Pornpen Nartpiriyarat
Head of Trading Law and Technical, Tesco Lotus

Rebecca Shelley

Rebecca Shelley
Group Corporate Affairs Director

Robert Folly

Robert Folly
Store Manager

Robin Terrell

Robin Terrell
Group Multi-Channel Director

Sarah Mackie

Sarah Mackie
Head of Local Sourcing

Scott Deutrom

Scott Deutrom
Managing Director, Clubcard TV

Simon Belsham

Simon Belsham
Managing Director, Grocery Home Shopping, Dotcom

Simon Hay

Simon Hay
Chief Executive - dunnhumby

Steve Strachota

Steve Strachota
Director of Distribution for the UK & ROI

Tom Hind

Tom Hind
Group Agriculture Director

Tracey Clements

Tracey Clements
UK & Ireland Support Office Director

Trevor Masters

Trevor Masters
CEO Asia

Philip Clarke

Our full-year results

17 April 2013 By Philip Clarke

Today we have published our full year results and we have updated our balance sheet to reflect the changing value of our US business, our UK property pipeline and our businesses in Poland, the Czech Republic, and Turkey. I want to use this blog to explain what has changed and why it has an impact on our reported profit.

First, the US business, Fresh & Easy. We entered the US in 2007. At the time, the three states we were in – California, Arizona and Nevada – were the fastest growing in the US. Two years later, they were the worst performing, having been hit hard by the subprime mortgage crisis. We invested a billion pounds of capital in Fresh & Easy to build stores and a distribution centre. For a combination of reasons we couldn’t make the business profitable quickly enough. Faced with a choice of investing further or selling up, we have chosen to sell up and to focus future investment in areas where we can deliver greater returns. Although the sale process is well-advanced, it is not finished. Until it is we have written down the value of the assets and included provision for leases which we cannot break.  We should recover some of the capital when we agree a sale of the assets but for now we are writing it all down.  

Second, the UK property pipeline. For many years, we bought land and developed it to build stores, mainly big stores. It served us very well for many years and was part of our success in the 90s. A year ago I said we weren’t going to do as much of that anymore. The large stores we have are great and we are doing a lot of work to make them more vibrant and relevant for today’s customers, but we won’t need many more of them because growth in future will be multichannel – a combination of big stores, local convenience stores and online. It takes a long time to develop stores, particularly large stores. Much of this property was bought more than five years ago, some more than 10 years ago. That is before the 2008 financial crisis, before the iPhone, social media, tablet computers, before we knew how profoundly technology would change both how we and our customers live and shop. Technology has changed much that we all took for granted and it is still changing. The last five years have shown that change in retail can be disruptive and come in sharp steps, not a steady trend. We must anticipate change and act decisively so we looked hard at the land we own and conclude that although we have a strong and attractive network of stores, we will never develop some of this land, mostly the very large mixed-use developments. We bought in a boom, but times have changed and we won’t make back what we paid for it, we won’t pretend we will, so we have written down the value.

These first two were the logical consequence of difficult decisions we have made in the last year. The third write down, the goodwill impairment, is a consequence of a rapidly slowing Eurozone economy. When we acquired businesses in Poland, the Czech Republic and Turkey, as well as the shops and other assets we bought goodwill. Goodwill is an intangible asset. It isn’t property or something you can see, it is the value of the business over and above the value of the tangible assets acquired and is based in part on the projected growth for the business. When we bought those businesses, those three markets were some of the fastest growing in Europe. Today, their growth is much slower or it is declining. Consequently growth of those businesses is slower than projected, so the goodwill must be written down to reflect that.

When you write down an asset, the difference between the stated value and new value is taken from profit. The write-downs are subtracted from our trading profit, which is the profit we make from selling products to customers. Our trading profit – the cash through the tills – was nearly £3.5billion last year, in spite of reinvesting in the UK business and difficult trading in Europe and Korea.

Big decisions come at a cost, but that won’t deter us from taking them, because they are the right decisions for our long term success. Leaving the US is the right thing to do. Stopping building lots of big new stores is the right thing to do. Building an international business, even when global economic headwinds work against us, is the right thing to do because it has delivered a billion pounds of profit this year alone. We have taken big decisions and these are the consequences, but having taken them our business is in better shape and better able to deliver sustainable, long-term growth.

Meet our team

Simon Hay
Luke Hickton
Ken Towle
Chris Bush

Tweets

Hello