Companies in the news ... and how they were assessed
Asda/walmart: return of price wars?
When the US supermarket giant Walmart bought Asda 17 years ago, the move “sent shock waves” through Britain’s grocery sector, said Deirdre Hipwell in The Times. But the combo “has never quite lived up to the hype”, and last week saw a new low when Asda reported its “worst sales fall on record”. Like-for-like sales in the second quarter fell by 7.5% – an even more dire performance than “an already bearish market had expected” following a 5.7% fall the previous quarter. The new boss, Sean Clarke, has a big challenge ahead of him, said Jon Yeomans in The Daily Telegraph. Walmart, which said it was addressing Asda’s slump as a matter of “urgency”, has signalled a return to “retail basics”. But “such a precipitous fall can augur only one thing”, said Simon Duke in The Sunday Times: “a price war”. And with the “colossus” of Walmart behind it, “Asda has the firepower to do serious damage” that could “torpedo Dave Lewis’s attempt to turn round Tesco”. Let’s hope not, said Graham Ruddick in The Guardian. More price cuts would be “ruinous” for the “Big Four” – “already struggling to make their largest stores profitable” following an ill-advised land-grab. Asda and its rivals have a long battle ahead, but “a race to the bottom” is not the answer.
Volvo/uber: robo-cabs
The race to bring self-driving cars to consumers is revving up, said Richard Milne and Leslie Hook in the Financial Times. Uber, “which has been investing heavily in driverless technologies”, has just formed a $300m partnership with the safety-conscious Swedish carmaker Volvo (which is owned by China’s Geely) to get a new self-driving car on the road by 2021. In its largest acquisition to date, Uber has also bought Otto – a company specialising in self-driving technology for trucks. Perhaps the most eye-catching announcement of all, however, is news that Uber “will start testing the world’s first autonomous taxi fleet in the next few weeks” in Pittsburgh, Pennsylvania. “The cars will not exactly be driverless,” said Samuel Gibbs in The Guardian: “they will have human drivers as back-up”. But they are “the next step towards a fully automated fleet” that will hasten CEO Travis Kalanick’s stated “mission” to provide “transportation as reliable as running water, everywhere for everyone”.
Sports Direct: brotherly love
Weeks ahead of what is expected to be “a stormy shareholder meeting”, Sports Direct is facing “new questions over its governance”, said Harry Wilson and Deirdre Hipwell in The Times. It emerges that the retailer has been making hefty “undisclosed payments” to an obscure Cleethorpes-based company, owned by the elder brother of its billionaire founder, Mike Ashley. Listed companies in Britain are required to disclose deals with parties who are connected with directors. According to Sports Direct, the tie-up with John Ashley’s firm, Barlin Delivery, helped the retailer to “de-risk” its overseas delivery. Investors don’t see it quite that way: one major shareholder described the deal as another “black mark”. This isn’t the first time that Sports Direct has come under scrutiny for Ashley’s personal connections, said the FT. In January, it emerged that he had put his daughter’s boyfriend, a 26-year-old former nightclub promoter, in charge of the retailer’s property team via a consultancy contract potentially worth millions.