Tesco CEO Dave Lewis has unveiled his plan to turn around the struggling British grocer, with drastic reductions in its head office staff, the company dividend, its video service and pension scheme.
Lewis is also relocating the head office from Cheshunt, where it was set up in 1973 by the chain’s founder Sir Jack Cohen, within Hertfordshire to Welwyn Garden City, and cutting head-office costs by 30%.
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Tesco has also appointed Halfords Chief Executive Matt Davies as the new boss of its U.K. business.
The downsizing is part of a plan to reduce overheads by 30 per cent, including the closing 43 stores and the final salary pension scheme. It is difficult to imagine Cohen objecting to the relocation, saying his motto was “you can’t do business sitting on your behind”.
Lewis softened up investors with a profits warning in December, and on Thursday he gave reassurance via a third-quarter update that maintained full-year profits guidance of £1.4 billion and revealed Christmas trading was not as bad as expected.
Net debt to underlying earnings has risen from 1.8 to 2.8 times in less than a year, according to S&P CIQ. But cutting the final dividend, combined with possible disposals, reduces the pressure for a rights issue. Tesco has a chance to shrink into a market position narrowed by price competition and changing shopping habits.
Tesco may have run out of Jewish chief executives but as a supermarket group it has remained true to its belief in owning the premises from where it does business, the Jewish Chronicle said in 2012.
