Plan may involve selling Tesco Bank
Tesco boss to cut jobs and sell assets in turnaround plan
Lewis, who took over as chief executive of the crisis-hit business in July, could hive off its data analysis business and even Edinburgh-based Tesco Bank.
Both would raise billions for the company which issued four profits warnings last year and unveiled a £260 million overstatement which led to the suspension of eight senior executives and is now the subject of an inquiry by the Serious Fraud Office.
Tesco Bank, headed by Benny Higgins, could be sold in its entirety, though more likely the company would float a minority stake on the stock market.
Goldman Sachs is advising on its options which also include a £3 billion rights issue. Selling Dunnhumby, the data analysis business behind the creation of Clubcard could raise up to £2bn. Advertising group WPP is said to be interested. Tesco’s Asian businesses could fetch upwards of £6-£7bn.
Lewis is known from his time at Unilever as a cost-cutter and analysts are expecting jobs to go along with the closure of a number of offices.
Analysts will be keen to find out how the chief executive plans to re-shape the stores portfolio amid speculation that more plans for big sheds will be shelved and some turned into online distribution depots.
He is expected to provide details of his Masterplan on Thursday when he updates the City on Christmas trading.
It has been a tough year for Britain’s biggest private sector employer. Apart from the profits alerts and accounting irregularity, US billionaire Warren Buffett sold a big stake in October and the falling share price wiped £12bn from the company’s value.
Analysts say Lewis’s strategy needs to include a strategy to tackle the discounters and rebuild its relationship with suppliers.
The latest figures from retail analysts Kantar Worldpanel show that Tesco retains just under 30% of the British grocery market and is still at the top of the pile. However, its market share shrank by 2.7% in the last 12 weeks while Aldi and Lidl’s sales grew by 22% and 18% respectively.
But while Lewis will want to halt this drift, fixing its balance sheet will take priority. Aside from asset sales and job cuts, the company has already cut its interim dividend and may scrap its final payout to shareholders.