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Tesco ends sale of 5p single-use carrier bags

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Tesco 'cementing recovery' after sixth consecutive sales rise

16 June 

Tesco is "cementing its recovery in the UK", says the BBC, more than two years after posting the biggest loss in British corporate history.

The supermarket group, the UK's largest by sales, this morning reported a rise in like-for-like takings for the three months to the end of March of 2.3 per cent, well up on the 0.7 per cent for the final three months of 2016.

It is also more than the 2.2 per cent forecast by analysts had forecast, while chief executive Dave Lewis said it was the "sixth consecutive quarter of positive like-for-like sales".

Strong sales were driven by Tesco's core food business, where comparative takings rose 2.7 per cent year-on-year, says The Guardian

Like-for-like sales is a preferred measure across the retail industry as they track relative success by comparing sales last year with sales at stores still open this year.

As such, they ignore the positive or negative impact of stores opening and closing and do not give any indication as to margins or profit.

This could be critical for Tesco, which said it is "working closely with… supplier partners" to limit the impact of price rises related to the slump in the pound since the Brexit vote, which has made imported goods more expensive.

Tesco, which last year briefly removed Marmite from its shelves in a dispute over post-referendum price increases, said food price inflation in its stores was running at 1.4 per cent.

Official figures yesterday put the annual rate of growth in retail prices at 2.8 per cent in May.

Wider inflation is running at 2.9 per cent, but average pay is growing at just 1.7 per cent and real wages are in decline.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "It remains to be seen just how much those higher sales will feed through into profits."

Tesco said it is continuing with its restructuring efforts, which include plans to sell its opticians business to Vision Express and to partner with Dixons Carphone to open Currys PC World outlets to fill unused store space.

Shares rose as much as 4.5 per cent in early trading when the results were first released, but it pared gains and was mildly in the red at the time of writing.

Tesco investors urged to rebel against executive pay

7 June

Tesco could face a significant rebellion at its annual meeting with shareholders next week with investors up in arms over its plans for executive pay.

Pensions & Investment Research Consultants (Pirc) advisory group has recommended that institutional backers vote against the grocer's remuneration report.

In particular, it raised concerns about a 179 per cent increase in benefits for chief executive Dave Lewis, much of a £142,000 payment to cover stamp duty and legal fees for his move from London to Welwyn Garden City, which is closer to the headquarters of Britain's largest supermarket.

Pirc also complained about the total value of Lewis's package, which is worth an "unacceptable" 294 times that of the average member of staff, says The Times.

There is no reason to suggest the call will lead to a majority of investors voting the remuneration report down and even if they did, that would not force Tesco into any changes as annual pay votes are not binding.

However, it would force the supermarket to come back next year with an update to its broader remuneration policy, which is subject to a binding vote typically held every three years.

Pirc did cite positive aspects of the remuneration report, including that Lewis's bonus potential, at 189 per cent of salary, is acceptable.

Tesco did not comment on Pirc's recommendation, but said staff were "paid total rewards in the top quartile of the market".

Despite the grocer seeing its first rise in like-for-like sales for seven years, Lewis's pay fell by ten per cent to £4.15m last year, mainly because his £2.4m bonus was 20 per cent less than in 2016, after pre-tax profits dipped.Executive pay has become a topical issue in the past couple of years, prompting a number of big shareholder rebellions and even talk of a clampdown from the Tories.

Tesco accounting scandal: Investigation into PwC dropped

05 June

The Financial Reporting Council (FRC) has announced it is ending its investigation into Tesco's accounts from 2012 to 2014, when the supermarket overstated its profits by as as much as £326m.

The watchdog, which was investigating the role of PwC in the affair, concluded there was "not a realistic prospect" that the accountants would be found guilty of misconduct, says the BBC

However, adds the broadcaster, "the FRC said it was continuing to investigate other chartered accountants who were auditors of Tesco". Its statutory powers include the right to sanction auditors or accountants found guilty of misconduct, with punishments ranging from a formal reprimand to financial penalties and, in extreme cases, removal of authorisation.

Tesco itself avoided criminal charges over the scandal by entering into a deferred prosecution agreement with the Serious Fraud Office. It will pay a £129m fine and compensation to investors of £85m.

Furore broke out in 2014 when a £263m black hole was discovered in Tesco's accounts which later grew to £326m, says the Daily Telegraph. It was found to have broken accounting rules artificially shifting payments to and from suppliers in order to inflate profits during reporting periods.

PwC has not been Tesco's auditor since 2015, when it was replaced by Deloitte.

Tesco boss's bonus falls despite performance turnaround

12 May 

Tesco Boss Dave Lewis was paid around ten per cent less last year than in 2015, despite overseeing the first rise in comparable takings for seven years.

"The chief executive of Britain's biggest supermarket chain received £4.15m last year, ten per cent less than his £4.6m package a year earlier," says The Guardian.

According to the firm's annual report, published today, Lewis received a bonus of £2.4m, 76 per cent of the maximum and down from £3m.

Deanna Oppenheimer, chair of the remuneration committee, said Tesco had performed well in a tough year for retailers.

"Tesco has had a year of strong progress, delivering against the three turnaround priorities of improving competitiveness in the UK, a more secure balance sheet and rebuilding trust, which were set in 2014," she said.

"A stable platform has been established and a strong performance delivered in spite of significant external challenges, which made 2016-17 another challenging year for retailers."

Tesco's like-for-like shares increased 0.9 per cent last year, the first increase since 2009/2010. Group revenues rose four per cent to £56bn and operating profit jumped 30 per cent to £1.3bn.

But a £235m charge, including a £129m fine relating to a deferred prosecution agreement with the Serious Fraud Office over the supermarket's 2015 accounting scandal, left pre-tax earnings down from £202m to £145m.

Tesco finance chief Alan Stewart's bonus was also cut, by £400,000 to £1.2m. He was paid £2.24m last year, 14 per cent less than his £2.6m package a year earlier. 

Tesco's 'fairy-tale recovery' continues as sales grow for first time in seven years

12 April

Tesco's turnaround is continuing as the grocer recorded its first full-year like-for-like sales growth in seven years.

For the year to 28 February, same-store sales rose 0.9 per cent - the first time Britain's biggest supermarket has increased comparable takings since the 2009/2010 financial year.

Underlying financial performance was similarly impressive: operating profit jumped almost 30 per cent to £1.28bn, busting analyst expectations of £1.2bn says the Daily Telegraph.

Group revenues, including overseas operations, were almost four per cent higher at £56bn.

However, there was a fly in the ointment - a £235m charge, including a £129m fine, relating to a deferred prosecution agreement with the Serious Fraud Office over the supermarket's 2015 accounting scandal.

This left pre-tax earnings down from £202m last year to £145m. Tesco's share price dipped three per cent this morning to 188p.

Analysts remained upbeat, however. John Ibbotson of Retail Vision said the "fairy-tale recovery story continues".

He continued: "In his relatively short tenure, [Tesco chief executive] Dave Lewis has turned a thoroughly demoralised business into one with a clear sense of direction.

"The core UK market is starting to fire on all cylinders… but there's a long way to go yet, especially with inflation likely to rise further and competition in the core UK market extreme.

"Remember that the old Tesco made profits of £3.8bn in 2011, a peak it may never again scale."

Ibbotson added that the store's proposed takeover of Booker Group, the country's largest food wholesaler, could "prove decisive".

However, the deal has been met with opposition from some large shareholders, while a competition investigation could yet conclude it can only proceed if Tesco is willing to offload a number of smaller stores.

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