TODAY’S FAYRE – Tuesday, 23rd September 2014
“O, that this too too solid flesh would melt
Thaw and resolve itself into a dew!
Or that the Everlasting had not fix’d
His canon ‘gainst self-slaughter! O God! God!
How weary, stale, flat and unprofitable, (135)
Seem to me all the uses of this world!
Fie on’t! ah fie! ’tis an unweeded garden,
That grows to seed; things rank and gross in nature
Possess it merely. That it should come to this!
But two months dead: nay, not so much, not two: (140)
So excellent a king; that was, to this,
Hyperion to a satyr; so loving to my mother
That he might not beteem the winds of heaven
Visit her face too roughly. Heaven and earth!
Must I remember? why, she would hang on him, (145)
As if increase of appetite had grown
By what it fed on: and yet, within a month —
Let me not think on’t — Frailty, thy name is woman!”
Hamlet, Prince of Denmark
William Shakespeare – playwright & poet – 1564-1616
‘Labour’s’ plans for the economy make really cheery reading on a Monday morning! Child benefit would rise by only 1% in the first two financial years if ‘Labour’ wins the next general election – less than the retail price index, currently 2.4%. The £400m saved would be used to help cut the deficit. Wow! I’m overcome – £400 million is chicken-feed!
Mr Balls is going to cut ministers’ salaries by 5% for 5 years and will hammer those earning £150k a year by reintroducing the 50p threshold. Goodbye incentives and cheerio to investment coming in from abroad! Though ‘Labour’ lead the ‘Tories’ in the opinion polls for the next election, surely there is not that much amnesia about? The financial nightmares of 2007-2010 will start to be rekindled on almost daily basis! Thank goodness I do not have to listen to this twaddle today!
After Alibaba’s hugely successful IPO opening when shares closed up 37.5% at $93.30 after hours, equity geeks, after a week of frenetic activity, had every reason to be at peace with the world Monday morning’s machinations have not been overly encouraging. China’s manufacturing data indicated that growth for the year was unlikely to breach 7%, which took Asian markets lower – CSI 300 in China is down 2.2%, the ASX by 1.3%, Hang Seng by 1.3% and the NIKKEI by 0.7%. Then there was bad news from Tesco. The new CEO Dave Lewis, who hardly has his feet under the table, announced that profits for the 6 months up until 23rd August 2014 had been over-estimated by £250 million, which lowered the forecast for the year to £2.4 billion from £2.8 billion. The shares initially fell by 11% to 204% – down 44% in the last year but rallied by 8.30am to 212p – down 7.5p at 8.45am.
Ever since Sir Terry Leahy vacated the ‘hot-seat’ back in March 2011, Tesco has been under the cosh. Phil Clarke was cloned rather intransigently in Sir Terry’s mould. Tesco should have recognised that a change in management style was essential. Tesco, despite having close to 30% share of the market, has never got to grips with the fact that Aldi and Lidl were ahead of the game in identifying what shoppers wanted and at what price. There has been no food inflation in recent times, but there has been a vicious price war. So sales have been dropping for nearly 3 years. Consequently profits are on the slide.
Dave Lewis, the CEO who replaced Phil Clarke, has hardly got his feet under the table, fresh from Unilever, when ‘lo and behold’ there is an irregularity in the books. Profits for the six months to 23rd August seem to have been over stated by £250 million, resulting in the year’s forecast being lowered from £2.8 billion to £2.4 billion. We understand that 4 executives have been suspended. Mr Lewis refused to confirm that Chris Bush, quite recently appointed CEO of the UK, was amongst those temporarily stood down. If that is the case there is speculation that Robin Terrell will take over.
What the market wants to hear is – where is Laurie McIlwell the former FD, recently replaced by Alan Stewart from M&S? He must give an account of himself to placate the market, which is displeased with TESCO’s arithmetical aberration. Shares fell by 11% and at 9.45am they are down 9% at 209p. In the last year Tesco’s shares have fallen by 43.5%. It would be great to have some reassurance from Chairman Sir Richard Broadbent.
These are David Buik personal views
Twitter – @truemagic68
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