Companies in the news ... and how they were assessed
Tesco/m&s/ocado: supermarket sweep-out
Another week, another “bleak” moment for British retail, said The Times. Oddbins, the vintner, is fighting collapse; stationer Paperchase is looking to close stores; and some 9,000 jobs are to go at Tesco – “the biggest cull yet” under the leadership of Dave Lewis, known in the industry as “Drastic Dave”. Tesco – still Britain’s biggest supermarket – plans to ditch meat, fish and delicatessen counters in 90 stores in an effort to build what it called “a simpler, more sustainable” business. The move is likely to cheer “independent butchers, bakers and candlestick-makers across the land”, analyst Clive Black of Shore Capital told the London Evening Standard. Rival Morrisons, which remains committed to selling “served counter” fresh food, could also benefit. Clearly, Tesco is on “a drive to lower costs”, said Alex Brummer in the Daily Mail: a figure of £1.5bn has been “bruited” in the City. This week’s other big supermarket news – a mooted tie-up between M&S and Ocado on food delivery – was essentially a response to the same threats: “the rise and rise of no-frills grocers Aldi and Lidl” and the “possibility” of a new “Sainsbury’s-asda” behemoth. But “the pieces on the grocery chessboard are changing so rapidly that it is difficult to keep up with strategy”.
Huawei: criminal charges
On paper, the Chinese tech giant Huawei has been “having a barnstorming time”, said The Economist. The company, which is owned by its employees, makes everything from smartphones and telecoms kit to solar panels; last year, its revenue jumped by 21% to $109bn, and it recently overtook Apple as the world’s second-biggest smartphone seller. Yet in the West, where distrust is growing, Huawei looks “beleaguered”. This week, US prosecutors filed a raft of criminal charges against the firm, accusing it, among other things, of “corporate theft and violating sanctions against Iran”, said the Financial Times. Huawei denies the charges – and also rejects criminal claims against its chief financial officer, Meng Wanzhou (the daughter of the founder), who was arrested in Canada in December. The company has already been frozen out of the 5G market in the US and Australia “over concerns its technology could be used for spying by Beijing”; the UK and Canada are pondering whether to follow suit. “I’ve got a Huawei phone. Bloody marvellous and a fraction of the price of an Apple. It’s totally welcome to spy on me talking rubbish to my cats,” wrote one contented UK user on Facebook. That may not be enough to guarantee the company’s future in Western markets.
Patisserie Valerie: “unsophisticated” fraud
A leaked KPMG report suggests that Patisserie Valerie’s sales were “in secret decline” for at least three years before the discovery of a £40m black hole triggered its collapse last autumn, said Oliver Gill in The Daily Telegraph. Documents containing the stricken café chain’s finances show revenues from “unloved” established stores were falling even as the management team, led by executive chairman Luke Johnson, pursued an “ambitious roll-out plan”. Indeed, “in dramatic contrast with financial information given to the stock market”, Pat Val was on course to notch up £2.6m of losses in the year to September 2019. In a separate report, PWC highlighted the “unsophisticated” nature of the suspected fraud, said Tabby Kinder and Dominic Walsh in The Times. It found “fictitious invoices for shop refurbishments”, as well as “forged company minutes” used to take out overdrafts. Finance staff also expressed concern in an email exchange over where they could find money to pay the then CEO, Paul May, said the FT. Pat Val’s auditor of 12 years, Grant Thornton, faces some tricky questions. But so does senior management. The demise looks like “another story of underlings trying to make numbers match the aggressive targets set by their bosses”, said Oliver Shah in The Sunday Times.
Fuller’s/asahi: bitter blow?
Fuller’s best-known pint, London Pride, “was named after the flowers that symbolised the shoots of recovery after the wartime Blitz”, said Lex in the FT. Now Japan has swooped in on the London brewery. The Japanese mega brewer Asahi is paying £250m to snap up the pub group’s beer business. “Regulars need not worry”: the brewery will continue operating and supplying the pubs. “Shareholders, meanwhile, can raise a goodbye glass to a division that had become a drag on profitability.” This is “a bitter blow” for the capital’s drinkers – ending an “august, independent history” dating back to 1845, said Alex Brummer in the Daily Mail. A handful of local breweries are resisting the march of global conglomerates. But British brewing’s regional heritage is being fatally eroded.