Quite a few Tesco shareholders said boss David Lewis overpaid for Booker when he spent £3.7bn of their finest on the wholesaler.
While a single set of quarterly sales numbers is nowhere near enough to pass verdict on a deal of that size, Tesco has just reported like for like sales growth of more than 12 per cent, excluding tobacco, at its new toy. Those critical of the deal will therefore likely keep their heads down and do their best to ignore Mr Lewis’ beatific smile at today’s AGM. They can always console themselves with the free lunch that is traditionally provided at these affairs.
Tesco’s UK business did well enough too, with a 2.1 per cent rise in sales. That was a smidgeon lower than the previous three month period (2.3 per cent) but it was the tenth consecutive quarter of growth and more or less in line with expectations. So not too shabby.
Moreover, the company said that things improved over its course, and that it invested in price cutting towards the end, which augers well for the future.
It’s worth remembering, at this point, the backdrop against which this remarkable continuing turnaround has been accomplished.
Real incomes have been stagnant or falling, squeezing household budgets. That has led to a succession of dismal sales across reports across the wider high street, exacerbated by the significant uncertainties wrought by the worst government in living memory. It is also grist to the mill of rivals whose main selling point is price, rivals such as Aldi and Lidl that continue to open stores like it’s going out of fashion.
Oh and it snowed during the three months in question, a fact that lots of retail CEOS have relied upon as their get of jail free card when reporting rather less stellar numbers than those Mr Lewis trotted out.
All of this serves to underline the point that however tough conditions are, retailers can still succeed in Britain through being good at retail.
Tesco is demonstrating that it is, in stark contrast to what went on at the business under Mr Lewis’ predecessor Philip Clarke, when it was rocked by an accounting scandal and gave every impression of steaming headlong into an iceberg (a familiar feeling in Brexit Britain, I know).
Mr Lewis really doesn’t need any assistance on this evidence, but he’ll get it with two of its main rivals (Sainsbury’s and Asda) trying to pull off a mega-merger.
There’s nothing like having the opposition distracted to make your life easier.
The competition watchdogs will spend the next 12 months chewing over their proposed deal, before they can even start putting the businesses together, so they will very much have their minds on other things.
If Tesco carries on like this could it, with Booker, ultimately pose more of a threat to competition than the two headed monster its rivals want to create? You do have to wonder.
