Thursday, 25 September 2014

A quick synopsis of stupid bloody Tesco

Unless your head has been buried in the sand (as mine was last week on a sunny island in the Ionian Sea) then you'll have noticed that Tesco has continued to add manure to the rather large fan it has constructed. The latest revelations? They can't add and just decided to guess how much money they had made in their latest interims.

While I'd like to think things can't get any worse, nothing at Tesco surprises me any more. They're the Barclays of retail now and consequently have the magnifying glass fully turned on them by the media and public. If something is afoot, it will definitely be found out, released and more damage will be done to their reputation, footfall, profits and share price.

I'd say it was time for drastic action. With a new CEO and CFO, take the time to clear the decks and release all the bad news as possible in one day. Sack the chairman who is clearly an idiot for allowing Clarke to eff everything up so badly.
The Previous Idiot
Take the hit, announce the new super plan (detailed below) the following week once everyone on the board of directors has announced they're buying £1m shares each themselves.

My SUPER PLAN of action would be this:

-Turn the Tesco mega boxes into Tesco property developments. Build houses around a typical small suburban shop area - have a Tesco Express, Tesco coffee shop, Tesco hairdresser and a couple of other shops. Make money by renting those and become Tesco Property. Easy.
-It's clear that the UK is now a mostly poor place to live in (outside London). Wages are low and being reduced on an inflation adjusted basis every few months. So it's time to compete with the cheaper end of the market (where Tesco began) and take on Aldi and Lidl, with a budget branded supermarket with limited range. Turn the stores that are in those areas and losing share into the cheaper brand. The rest of them can continue at the middle end in more affluent areas.
-Hire some people at the supermarket management level who actually care about them.
-Address customer service as quickly as possible.
-Tidy the stores up!!!!! Clean the aisles, stack at night, pick up the crap, put the rubbish away and not outside the door....

-Go back to being better than the rest as that's what made the difference to begin with. Competitive pricing, good stock levels, clean stores, helpful staff. This is so bleeding obvious.
-Are the little spinoffs of Tesco making money? ie. Blinkbox, Bank, Online, Delivery, etc.? If not, ditch them.
-Clean up the balance sheet. Start paying off some debt so you don't look like such a basket case.
-Is it possible to have some sort of employee ownership scheme like John Lewis - staff love working for them. Even just making a stand on short hours contracts - ditching them, getting the staff to love you, making yourself look good to the public again will help.

Morrisons and Co-op will eventually die. Sales and profits in the UK will pick up then with less competition. Globally Tesco should continue to do ok, so it's just a matter of time to see this out.

Will Tesco die like Woolworths? I don't think so, but it needs to kill off its weaker competitors as soon as possible.

I'm sorely tempted to buy more now...although to do so would be even more contrarian than buying Russia or investing in Syrian / Iraq housing.

Here's a roundup of everyone else's posts. They are all excellent pieces:

DIY Investor - Tesco Top Up Decision - he's all in again....
Under the Money Tree - Tesco Palaver - staying well clear for now...
Mark Carter - Tesco - keeps revising his valuation down (ahhh the benefit of hindsight)
Mark Ritson (marketing chap) - Tesco risks being famous for being broken - likens Tesco to Nokia, Blackberry, Woolworths and Northern Rock. Very pessimistic.
Expecting Value - Tesco, Yes Again - compares them to Man Utd's recent woes. Excellent.
Share Centre - Tesco's Comedy of Errors -  thinks Dave will need to be bold and do something creative. Big fans of creativity here at Investimouse.

Oh well, it's only one company and nothing's permanent in this world. We'll move on to the next big thing I'm sure...