Troubled Tesco today unveiled a dramatic turnaround plan, which will be led by Halfords chief executive Matt Davies when he starts as the supermarket's new UK boss in June. Its share price soared more than 10 per cent in mid-morning trade. But what are the analysts making of it all?
Finally fighting back:
John Ibbotson, director of retail consultants at Retail Vision, said:
Finally, we are witnessing the beginning of the Tesco fightback.
Chris White, head of UK equities at Premier Asset Management, added:
There's enough in this statement to suggest that Tesco has started to stop the rot.
The turnaround plan:
Daniel Sugarman, market strategist at ETX Capital, said:
The most notable elements [include] the planned closure of both its Cheshunt HQ and 43 UK stores, the ending of its final salary pension scheme and no forthcoming dividend payout to shareholders.
David Madden, market analyst at IG, added:
The disposal of Blinkbox and the halting of the final dividend will help beef up the balance sheet, but Mr Lewis will need to enhance transparency in order to win back institutional investors.
Dave Lewis' arrival and other changes to the top team:
Phil Dorrell, director of retail consultancy Retail Remedy:
The new man at the top has started well and is getting more right than he gets wrong. He is also savvy enough to manage expectations, and is under no illusions the brand faces a long haul.
Darren Shirley and Clive Black at Shore Capital said:
Mr. Davies' appointment is significant in our minds as it represents another external candidate taking up a key role at Tesco.
Bryan Roberts, director of retail insights at Kantar Retail said:
[Tesco has] a long way to go but Dave Lewis is pulling the business in the right direction.
Key takes from the turnaround plan:
- Halfords chief executive Matt Davies to take Tesco's top UK job
- No final dividend for the rest of the year
- The sale of Tesco Broadband and BlinkBox to TalkTalk
- Closure of its Cheshunt HQ and 43 UK stores
- 49 planned new stores axed
- Welwyn Garden City its UK and group centre
- Consultation to drop its final salary pension scheme
- The intended sale of Dunnhumby
- Lower price campaign on branded product