NAPOLEON Bonaparte was right: Britain is a nation of shopkeepers. Tesco’s great figures yesterday confirm that the retailer remains one of the UK’s few truly world-class corporate giants. Group sales increased by 7.5 per cent at constant exchange rates and like-for-like UK sales (ex-fuel and adjusted for Vat) were up by 4.9 per cent in the six weeks to 9 January, the firm’s best performance in three years. All the UK growth came from improved volumes, with the Clubcard scheme alone responsible for 0.7 points of the like-for-like growth. So while low interest rates helped Tesco last year, the bulk of its strong growth was due to its own skill and hard graft. On-line sales growth was close to 20 per cent, a very good performance which suggests that the internet still has a long way to grow; Tesco Direct, which specialises in electricals goods and furnishings, was up 50 per cent.
While up a strong 4.1 per cent, international sales didn’t blow out the lights, partly because CEO Sir Terry Leahy correctly decided that he needed to regain the initiative in the UK, where the firm had been under some pressure. Its Fresh and Easy chain in the US is still loss-making but enjoyed a double-digit jump in like-for-like sales and total revenues up 24 per cent as a result of new store openings.
Tesco ought to be able to make huge strides globally in the next few years as it applies the tricks it has learnt in the ultra-competitive UK arena to other markets. Meanwhile, the rest of the UK economy ought to study closely Tesco’s obsession with detail, efficiency gains and its consumers. It is a case of listen, learn or slowly wither away.
TOO MUCH HATE
Here is an astonishing fact for you, as Barack Obama prepares to hit Wall Street (and hence many of London’s biggest employers) with a punitive levy ahead of the banks’ reporting season. The US?Treasury says the losses on its $700bn Troubled Asset Relief Program (Tarp) hit $68.5bn for the year ended in September. So far, so unsurprising.
But the aggregate loss camouflages the remarkable fact that taxpayers actually made a $15bn profit on the bailed-out banks as they repaid capital injections with interest; Tarp also clocked up an extra $4.4bn in profits from its other bank investments, guarantees and lending programmes.
The reason why the taxpayer remains in the red is losses of $30.4bn at AIG, the insurance giant, $30.4bn for carmakers, and $27.1bn from Barack Obama’s scheme to renegotiate mortgages to prevent borrowers from being evicted from their homes. AIG was the only disaster for the taxpayer on Wall Street; the taxpayer made a profit on its loans to the banking industry. On top of this, the Fed made $52bn (£32bn) in profit last year, up 47 per cent, as a result of its asset purchases, loans and other interventions. This meant it paid $46bn to the Treasury.
None of this is a justification for bailouts. The rewards generated by the banking industry are only justifiable in a real free-market. We need a new bankruptcy law to allow large, complex financial institutions to go bust, wiping out bondholders, shareholders and employees’ long-term bonus plans in a controlled manner that preserves overall stability. There should be no such thing as too big to fail. But it is also time for a reality check: Wall Street didn’t consume trillions of dollars in taxpayer money, as many people believe. This is just baseless nonsense. It is time for a little more perspective and a little less hate.