FRAUD charges against ex-chiefs do not alter Tesco’s bounce back, writes Martin Flanagan
It says much about Dave Lewis’s success in simplifying and stabilising a drifting Tesco that one doesn’t get too excited by yesterday’s news that three of the supermarket group’s former executives have been charged with fraud by the Serious Fraud Office (SFO).
Lewis was parachuted in two years ago from Unilever as Tesco’s new chief executive, replacing the hapless Phil Clarke, amid a flurry of profit setbacks and a £263 million accounting scandal, later revised up to £326m.
The news that Carl Rogberg, Chris Bush and John Scouler, Tesco’s former finance chief, managing director and food commercial head respectively, have been charged with one count of fraud by abuse of position and one count of false accounting between February and September 2014 will obviously retain something of a public relations shadow over the group’s targeted retail turnaround.
And there might be further scalps, as the SFO said yesterday that the investigation into Tesco, which began in the autumn of 2014, continues.
But as time rolls on and Lewis continues to put his stamp on the business, the accounting scandal already has the feel of the historical rather than a current challenge. If individuals are found culpable they face possible jail sentences, but it has no trading or financial relevance to the company’s quest for renewed strength and stock market favour.
Last June, Tesco produced only its second consecutive quarter of same-floorspace sales growth in five years.
Admittedly, the two quarterly rises – 0.9 per cent followed by 0.3 per cent – were not in any way shoot-the-lights-out statements. But the performance showed that the direction of travel under Lewis was positive in well under two years, as has been his no-nonsense streamlining of Tesco’s footprint and once-bloated cost structure.
Businesses sold off have included Dobbies Garden Centres, the Giraffe restaurant chain and the somewhat twee Harris + Hoole coffee chain (the latter two acquisitions were made by predecessor Clarke), as well as the strategic retreat by Tesco from South Korea.
One cannot say the accounting scandal has been put to bed, but in the wider picture it is no longer germane to Tesco’s future fortunes.