|Bid||248.60 x 0|
|Ask||248.80 x 0|
|Day's range||246.70 - 248.80|
|52-week range||210.70 - 293.40|
|Beta (5Y monthly)||0.42|
|PE ratio (TTM)||18.55|
|Earnings date||08 Apr 2020|
|Forward dividend & yield||0.07 (2.64%)|
|Ex-dividend date||10 Oct 2019|
|1y target est||269.93|
(Bloomberg Opinion) -- Bangkok’s billionaires don’t usually have to contend with much resistance as they expand. Tesco Plc’s sale of its Southeast Asian supermarkets may be about to change that.The $32 billion British retailer said in December it was considering selling the group’s stores in Thailand and Malaysia, becoming the latest international grocery giant to bow out of Asia. First-round bids for the asset, estimated to be worth between $7 billion and $9 billion, are due this week. Suitors are likely to be drawn from local conglomerates, among them: Dhanin Chearavanont’s CP Group; Central Group, controlled by the Chirathivat family; and beer-and-spirits magnate Charoen Sirivadhanabhakdi's TCC Group.So far, so normal for tycoon-heavy Thailand. Perhaps not. Last month, the Office of Trade Competition Commission, or OTCC, threw a wrench in the gears, signaling before offers even materialized that it would review the deal and could rule against any combination that grabbed too much of the market.Thailand’s government has revamped the antitrust authority since 2017, turning it from a dormant and toothless appendage of the Ministry of Commerce into an impartial agency with an independent workforce. Taking a tough stance could burnish the pro-military administration’s consumer-protection credentials, as it battles a slowing economy and the country’s worst drought in decades.Added to that, this is the the first high-profile, consumer-facing case that the new-look OTCC has handled. It’s also, potentially, one of the largest-ever acquisitions by a Thai group, and among the largest deals in Asia this year. That all but sets up a tussle with some of the most powerful patriarchs in Thai business.In theory, problems arise when a company has a market share of 50% or more. The trouble here, as in every antitrust debate, is deciding what counts as a market.Tesco, under the Tesco Lotus brand, is already Thailand’s biggest supermarket chain with almost 2,000 stores, plus 74 in Malaysia. So, do convenience stores, like CP’s 7-Eleven outlets, count as part of the same market? By the broadest definition, CP touches the vast majority of Thailand’s food chain. What about duty-free, should a last-minute bid come from King Power Group, run by the billionaire Srivaddhanaprabha family that owns Leicester City Football Club? Central Group, meanwhile, has 200 supermarkets, and TCC owns Big C hypermarkets.All of that suggests plenty of wrangling ahead. Worse, Thailand now has a two-stage reporting structure: Unusually by global standards, would-be merger partners may have to report both ahead of and on completion of any deal that creates a dominant player. That means passing the first hurdle doesn’t guarantee a bidder will clear the second.In the end, asset sales may be the most palatable solution, should a big retailer win the contest. Antitrust bosses, still early in their tenure, may be reluctant to irk too many big names. Chinese regulators ruffled plenty of feathers when the Beijing-based Ministry of Commerce vetoed Coca-Cola Co.’s acquisition of a Chinese juice maker in 2009. And Thailand, with its unimpressive economy, badly needs investment.Still, supermarkets are a sensitive and unpredictable area for antitrust authorities, with their focus on safeguarding consumers. Britain’s Competition and Markets Authority, after all, last year stopped J Sainsbury Plc from buying Walmart Inc.’s Asda to create the country’s largest supermarket chain. This could turn into quite a food fight. To contact the author of this story: Clara Ferreira Marques at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Christmas 2019 should be consigned to the dustbin along with the crumpled wrapping paper and the wilted tree. That’s the message that has come in loud and clear from British retailers. And it caps off a miserable year. Total sales for 2019 fell by 0.1%, the worst year on record, according to the British Retail Consortium and KPMG.There’s no doubt consumers were cautious in the run-up to the holidays. But store groups can’t blame it all on Brexit. There were some own goals, too.Wm Morrison Supermarkets Plc missed the halo effect from Black Friday by reining in promotions right as shoppers sought deals during the U.S-imported retail frenzy. Marks & Spencer Group Plc also hasn’t participated for the past few years. While it’s the right instinct to protect against diluting margins ahead of the holiday season, going too far to do so is painful too.John Lewis Partnership Plc warned that its profit would be “significantly lower” than a year ago, and parted company with the head of its department-store arm, Paula Nickolds. It’s hard not to think the privately held company’s challenges have been made worse by some of its own decisions, such as blindly sticking to its pledge to always be cheaper than rivals. Times have changed since the promise was made many years ago, and it’s become untenable in a market characterized by intense and constant discounting.But perhaps the performance by M&S is the most disappointing. After seeing some positive signs in women’s wear, it made a fashion faux pas in men’s clothing by getting too trendy for many of its customers. Its range of more contemporary, slim fitting shirts and suits weren’t on trend with its predominantly older shopper base, and it simply stocked too many small sizes than was reasonable.The high street stalwart also didn’t have the right Christmas gifts, having gone down market just as consumers were seeking more expensive items, such as cashmere sweaters, and more experiential gifts such as spa days. Consequently, M&S’s like-for-like sales in clothing and home furnishings fell 1.7% in the third quarter, worse than the consensus of analysts’ expectations for a 0.8% decline.The performance is particularly disappointing given that many of M&S’s key competitors, including Debenhams Plc, John Lewis department stores, Mike Ashley’s House of Fraser and Philip Green’s Arcadia, are not firing on all cylinders. And the self-inflicted damage wasn’t confined to clothing. Although demand for M&S’s Christmas food was strong, it wasn’t as pronounced as it had hoped. It misread the market, buying too much festive fare to make sure it had enough available and wound up with far too many leftovers once the holidays came to an end. Consequently, gross margins are expected to be at the lower end of expectations.The shares fell as much as 11.6%. It isn’t the first time M&S has messed up at Christmas. In the past, it suffered from problems at a key distribution center at Castle Donington in central England. This year that facility held up, but the new round of blunders is worrying. In contrast, other groups that have been operating quietly without hiccups, such as Tesco Plc, Greggs Plc and discount home-furnishings retailer Dunelm Group Plc, delivered solid performances. It will also be worth watching out for Associated British Foods Plc, which should have benefited from Primark’s strong selection of gifts and party dresses in the run up to the holiday.With any Boris bounce after the U.K. election proving elusive, 2020 is set to remain tough. The lesson from this Christmas trading season is that to prosper, retailers need to stick to their knitting, and ensure that their own actions don’t make an already difficult backdrop even worse.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
One Royal demerger to start: It is a deal that will not go before the UK Takeover Panel, even though communications from the parties involved have all the trappings of a hostile battle. Prince Harry and Meghan Markle announced their effective resignation from their royal public duties and declared their intent to be “financially independent”. The response from Buckingham Palace, below, reads like communiqués straight out of the M&A business.
Strong food sales helped UK retailer Tesco record a small rise in sales in its core UK and Ireland business over Christmas despite a “subdued” market. After a bumper 2018 Christmas — when it was the best performing of Britain’s four biggest supermarkets — Tesco reported 0.4 per cent sales growth on a like-for-like basis in its main region for the six weeks to January 4 2020, in line with analyst expectations. Like-for-like Christmas sales growth in the same period last year was 2.6 per cent.
Tesco’s planned sale of its Thai operations will be subject to close scrutiny, Thailand’s competition regulator has warned, adding that he is prepared to impose fines or ban the deal outright if any laws were to be breached. The comments from Sakon Varanyuwatana, chairman of Thailand’s Office of Trade Competition Commission, signalled that the deal, expected to be worth $8bn-$9bn and one of Asia’s biggest M&A transactions this year, could face regulatory opposition. UK grocery group Tesco said last month that it had begun a review of strategic operations for its businesses in Thailand and Malaysia, including “evaluation of a possible sale”.
(Bloomberg Opinion) -- Flashback to mid-December. British voters had just delivered a decisive national election victory to Boris Johnson’s Conservatives with two full weekends left before Christmas. Expectations were high that shoppers, giddy at the prospect of an end to political gridlock and repetitive threats of hard Brexit, would rush to the stores to make up for lost time in their holiday preparations and provide a much-needed boost for the country’s big supermarket chains.Anyone in the industry expecting a Boris bounce was sorely disappointed. Numbers out Tuesday show the U.K.’s largest food retailers suffered from subdued trading over the crucial Christmas and New Year’s period.Wm Morrison Supermarkets Plc said consumers remained cautious, even if there was a bit of relief following the election result. Still, it wasn’t enough to make up for belt tightening. Although customers put the same amount of Christmas fare in their baskets, the number of times they shopped was marginally down, it said.It didn’t help that a price war broke out in the run up to the holidays, with the U.K. arms of the German discount chains Lidl and Aldi slashing prices. They drew shoppers with offers, such as bags of Christmas vegetables from as little as 15 pence. Morrison was offering three British vegetables for one pound, including a 2.5 kg bag of Maris Piper potatoes, described by Chief Executive Officer David Potts as a knock-out offer. But with intense competition from the discounters, perhaps it just wasn’t knock out enough. Where consumers treated themselves, it seems they opted for Aldi’s Specially Selected mince pies.Moderating food price inflation was also a hindrance. Morrison estimated that over the past couple of months food-price inflation was close to zero. When food prices are rising, the value of supermarkets’ sales is automatically boosted.Morrison may turn out to be one of the weakest performers. But trading across the whole of the U.K. food retail market was lackluster, according to industry research group Kantar. 2019 saw the lowest rate of growth over the Christmas period since 2015, it said.What oxygen there is in the market is feeding the discount supermarkets. Excluding online-only supermarket Ocado Group Plc, Lidl was the strongest performer in the 12 weeks to Dec. 29, with sales up by 10.3%, according to Kantar. Aldi also expanded its sales by 5.9%, a slower rate of growth than in the past, but still way ahead of the so-called big four supermarkets, Tesco, J Sainsbury Plc, Walmart Inc.’s U.K. arm Asda and Morrison.Sainsbury, which reports on Wednesday, may be more upbeat than Morrison, as its stronghold is in the southeast, where there is less competition from the discounters, and it tends to outperform at Christmas. Tesco may also do better, as it has been one of the stronger performers over the past few months, and that may continue.But it provides little comfort that all of the big four saw their sales fall in the 12 weeks to Dec. 29, compared with the year earlier, according to Kantar.With U.K. wage growth still ahead of inflation, and consumer confidence showing some improvement, Johnson’s resounding victory and the certainty it appeared to provide around Britain’s departure from the European Union was supposed to boost holiday shopping. Coming in mid-December, it probably came too late to make a noticeable impact on spending on clothing and gifts, but it should have had a positive impact on supermarket shopping. That clearly didn’t happen, and that is a worrying sign for grocers as they move into what is traditionally a lean time after the holidays. This year it could be even more painful, as many consumers move out of categories such as alcohol and meat, as trends like Dry January and Veganuary gain pace.As for Morrison, the company needs to be on its guard. When food prices are rising, all of the big four supermarkets can prosper at the same time. When there is little growth, grocers need to steal sales from a weaker rival. This time last year, that was looking like Sainsbury. Now Morrison looks vulnerable. It has a strong management team, robust balance sheet, more than 85% freehold property and a developing wholesale business. Even so, it needs to get its sales growth back on track, to make make sure it does not become 2020’s Christmas feast.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2020 Bloomberg L.P.
(Bloomberg) -- The Thailand and Malaysian operations of Britain’s largest supermarket chain Tesco Plc. are on the shopping lists of Thai tycoons.Thai billionaire Dhanin Chearavanont’s Charoen Pokphand Group and Central Group, controlled by Chirathivat family, are among companies that are weighing bids for the Southeast Asian business that could fetch more than $7 billion, according to people with knowledge of the matter.CP Group and Central Group are holding discussions with financial advisers preparing for separate bids, said the people, who asked not to be identified as the information is private. TCC Group, controlled by Thai billionaire Charoen Sirivadhanabhakdi, has also expressed interest, the people said.Tesco said in December that it is carrying out a strategic review of its Thai and Malaysian businesses after receiving interest. A sale of the Asian operations would allow the supermarket chain to get an infusion of cash to continue a restructuring of its core U.K. business that has cut thousands of jobs.Tesco is expected to call for initial bids for the businesses as soon as next month, the people said. Companies might decide against making any offer as deliberations continue, the people added.A representative for Tesco said the company has no comment beyond its Dec. 8 statement. A spokesman at CP Group said the company has no information to share at the moment, while a representative for Central Group declined to comment. TCC Group isn’t immediately available for comment.Tesco has more than 2,000 hypermarkets and convenience stores in Thailand under the “Tesco Lotus” brand. The chain was founded by CP Group in 1994 and later taken over by the British firm, according to its company website. In Malaysia, Tesco has over 70 shops, according to its annual report. Malaysian conglomerate Sime Darby Bhd owns a 30% stake in Tesco Malaysia.Berli Jucker Pcl, controlled by TCC, bought a controlling stake in Casino Guichard-Perrachon SA’s Thailand supermarket chain Big C Supercenter Pcl for 3.1 billion euros ($3.45 billion) in 2016. Big C is the country’s second-largest supermarket chain behind Tesco Lotus.\--With assistance from Natnicha Chuwiruch, Anuchit Nguyen and Corinne Gretler.To contact the reporters on this story: Vinicy Chan in Hong Kong at email@example.com;Manuel Baigorri in Hong Kong at firstname.lastname@example.org;Elffie Chew in Kuala Lumpur at email@example.comTo contact the editors responsible for this story: Fion Li at firstname.lastname@example.org, Philip GlamannFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- It’s the worst nightmare of supermarkets and food delivery firms alike: Amazon.com Inc. turbocharging its grocery business with a network of couriers who can have grub on your doorstep within an hour.So you can see why Britain’s competition regulator has decided to challenge the e-commerce giant’s planned investment in Deliveroo, the U.K. rival to UberEats. The Competition and Markets Authority needs to tread carefully, though, as denying the funds to Deliveroo might inadvertently make it less able to compete in the food delivery business. That would be an unfortunate outcome.Back in May, Deliveroo announced a $575 million funding round led by Amazon. On Wednesday, the CMA determined that the investment might hurt competition in U.K. food delivery. It has given the companies five days to offer remedies, and it will launch a deeper probe if they don’t.The CMA’s concerns are warranted. While Amazon shuttered its British restaurant delivery operations last year, it remains interested in the market. The Deliveroo investment is a way of staying in the game; the American company is no doubt interested in the British business’s tens of thousands of riders. The two are also rivals in grocery deliveries, so forging a closer alliance would discourage them from competing. That’s a risk for delivery rival Ocado Group Plc and supermarket chains such as J Sainsbury Plc and Tesco Plc.A lengthy CMA investigation might be a problem, though, because of Deliveroo’s pressing capital requirements. A probe probably wouldn’t complete until the second quarter of next year, according to Bloomberg Intelligence analyst Aitor Ortiz. By then Deliveroo will have waited a year to receive its investment. If previous form is a guide, it needs that money. In 2018 Deliveroo burned through almost 200 million pounds ($263 million) of cash. If it has been spending at a similar clip this year, it might be nearing the bottom of its pile.There are plenty of remedies that might be acceptable to the CMA: An assurance from Amazon that it won’t try to buy Deliveroo for five years; a pledge not to integrate delivery services; and Amazon refraining from taking a board seat. If such concessions remove Amazon’s rationale for the investment, then it should back out. At least that would give Deliveroo an earlier opportunity to find different funding.The CMA will have one eye on what happened recently in the German food delivery market, where Takeaway.com NV acquired the local businesses of Delivery Hero SE, giving it more than 90% market share. But it can afford a degree of lenience in this case. It could still block any merger, should that materialize. Delaying Deliveroo’s access to funds would probably hold the company back in its market scrap with UberEats and Just Eat Plc.Regulators have been poor at anticipating the market-cornering impact of deals in the past, most famously Facebook Inc.’s acquisition of Instagram and Google’s $3.2 billion purchase of DoubleClick. Scrutinizing Amazon is right and proper, and a commitment not to integrate Deliveroo’s courier network would be a fair condition. But unless a full merger is on the table, the CMA mustn’t overdo things.To contact the author of this story: Alex Webb at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Selling Tesco Plc’s operations in Thailand and Malaysia for about 7 billion pounds ($9.2 billion) would be a nice parting present from outgoing Chief Executive Officer Dave Lewis to his successor Ken Murphy. But there could be a sting in the tail from such a lavish gift. Tesco would be even more focused on its home turf in the U.K., where it’s in a merciless battle with discounters from Germany.Tesco said on Sunday that it was carrying out a strategic review of the business, after receiving interest from potential buyers. Britain’s biggest supermarket is right to consider whether its remaining Asian operations might be worth more to a rival. Analysts at Bernstein estimate the Thai and Malay businesses could fetch between 6.5 billion pounds and 7.2 billion pounds. What’s more, with Bernstein estimating of typical transaction multiples in the region of about 13 times Ebitda, and Tesco currently trading on an enterprise value to Ebitda multiple of 7.6 times, then this unit isn’t being adequately reflected in Tesco’s valuation.The Asian business is a highly profitable one, with an underlying operating margin of 5.87% in the year to February 2019, close to twice that at both Tesco’s U.K. and central European divisions. Selling this arm would be a further retrenchment from Tesco’s international assault of the 1990s, and leave the company focused on its core retail operations in the U.K. as well as its bank in its home market. Its only overseas outpost would be central Europe, a business it would most likely love to sell if a buyer could be found.Tesco doesn’t need to offload assets to strengthen its balance sheet, in contrast to when it parted company with its South Korean business in 2015. It has been bringing down debt, enabling it to raise its dividend and generating hopes that it may soon begin returning cash to shareholders. A chunky price for the Thai and Malay units would make this even more likely. Indeed, the shares rose about 5% on Monday as investors salivated over a sizable buy-back or special dividend.It would also provide Murphy with a war chest to slash prices. He joins Tesco from Walgreens Boots Alliance Inc., where he spearheaded an expansion in China. However he has no direct experience of the cutthroat U.K. grocery sector. Pricing is one area where Lewis could have done more. Although he made Tesco more competitive with its suite of cheaper exclusive brands, he could have tackled the problem earlier in his tenure.With the disposal proceeds, Murphy would be able to move quickly. He needs to. The U.K. arms of the German discounters Aldi and Lidl continue to go from strength to strength, improving their premium offerings and moving into high-margin areas for the mainstream supermarkets, such as vegan food. Being able to more effectively fight the no-frills supermarkets would be helpful to the new CEO.He would also be able to put pressure on traditional supermarket rivals, such as as J Sainsbury Plc, Wm Morrison Supermarkets Plc and Walmart Inc.’s Asda, at a time when the grocery market is sluggish. Meanwhile, some of the proceeds could be used to beef up other areas of Tesco, such as its online operations and its cash and carry arm Booker.But prices on the shelves of its domestic supermarkets are the key driver of the retailer’s fortunes. And with an attractive Thai and Malay deal, it might just be able to get them right.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- This Christmas, instead of a free-range turkey, how about a beef-less Wellington washed down with a few glasses of “Nosecco”? And rather than falling asleep watching the Queen, why not tune in to your inner self with a spot of meditation?This might not sound like traditional festive fun, but now that the craze for all things vegan has crossed the Atlantic, it’s what British retailers are betting on to lift sluggish supermarket sales and see off brutal conditions on the high street, at least for a spell.A rough estimate suggests that across the big U.K. supermarket chains, meat-free offerings of traditional Christmas fare are up by between 40% and 400% this year. This underlines how veganism has moved from niche to mainstream over the course of 2019 as more consumers cut out animal products altogether, or reduce their meat intake with a “flexitarian” diet. Just look at the popularity of the vegan sausage roll introduced by baker Greggs Plc. There’s likely to be at least one vegan at any big Christmas gathering, and so being able to cater for them with plant-based canapés is crucial. And while many families won’t ditch the turkey altogether, they may well replace another meat protein, such as beef or gammon, with a fancy nut roast, savory yule log or vegetable wreath. Sales of plant-based substitutes still represent a small share of the overall grocery market, but they can have a significant influence over shopping habits. Being able to buy a good selection of food for a vegan daughter, for example, is likely to determine where shoppers fill up their grocery carts for the whole family. No wonder the category has become a key battleground.There’s another reason why it’s worth supermarkets’ while to go vegan. Plant-based versions of festive favorites such as pigs in blankets tend to be more complex to make and require innovative ingredients. J Sainsbury Plc is this year offering party food made from the blossom of the banana tree, which can be used as a substitute for fish. This builds on the popularity of the jackfruit, a tropical fruit that is a good alternative to pulled pork. All of this added value means supermarkets can charge a premium.QuicktakeThe Vegan EconomyThat won’t last forever though. The U.K. arms of the German discounters Aldi and Lidl are piling into this market too. Lidl has two Christmas-specific vegan lines, while Aldi has nine, including pastry crowns and vegan cocktail sausage rolls. Neither had a plant-based offering last year. Wm Morrison Supermarkets Plc recently cut the price of its foods that are free from certain ingredients, such as gluten, while Tesco Plc has launched an affordable plant-based range.In another sign of the times, supermarkets this Christmas season are bulking up on party drinks that are low in alcohol, or contain none at all. Not only do they tend to be premium products, particularly non-alcoholic spirits, but retailers don’t pay duty. So, while they can charge the same or more for a fancy but sober drink, they get to keep a bigger slice of the selling price.It helps that the market is growing rapidly, as many consumers, particularly younger people captivated more by their social media feeds than their real social life, reduce their alcohol intake. Beer led the way, spawning Budweiser’s Prohibition Brew and Brewdog’s Nanny State, with wines and particularly spirits exploding this year. Demand from supermarket shoppers follows the trend in clubs and pubs where “mocktails” are now a staple of the cocktail menu. Going on the wagon is usually associated with January, but the run-up to Christmas can also be a time for restraint as people become more conscious of pacing themselves through rounds of festive events, not to mention all of those designated drivers. Asda, the U.K. arm of Walmart Inc., estimated that December sales of low- and no-alcohol drinks are double those of the average month. It’s all part of the new mood around Christmas, characterized by rising environmental awareness and a focus on health and wellness. Throw in the ongoing uncertainty around Brexit and the general election, and there are fewer celebrity blockbuster Christmas advertisements this year, with most retailers returning to traditional themes such as family and nostalgia for the past.Even tree trimmings are falling in with the trend. The Sanctuary range from John Lewis features pastel hued baubles including Buddha heads and an ornament depicting a woman reclining in a luxurious bubble bath. Its focus is on serenity — something that’s often in short supply over the busy festive season.After the decorations come down, consumers may continue to embrace plant-based diets with Veganuary, which has rocketed in popularity over the past five years. Dry January will bolster sales of no- and low-alcohol ranges. But beyond that, it could well be retailers themselves that are in need of some self-care. The months following the holidays are often lean ones, as consumers rein in spending after the excess of Christmas. It can also be tricky for supermarkets to accurately gauge demand and control waste when consumers switch in and out of different food and drink trends so dramatically. This year could be particularly hard if the election is followed by the return of fretting over Brexit. So these swings will be an extra burden to manage.The New Year hangover may still be with us, even if it is an alcohol-free one.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Ocado Group Plc’s new deal in Japan is appetizing, but it’s probably bitten off more than it can chew.(Bloomberg Opinion) -- The online grocer that’s specialized in automating how orders are filled said on Friday that it will provide Aeon Co. with its technology, initially in the region around Tokyo. It hasn’t put a value on the deal, but Ocado expects the contract to cover sales of about 1.5 billion pounds ($1.9 billion) by 2025, rising to about 7 billion pounds by 2035.To achieve that, analysts at Bernstein estimate that it will need to build about 20 automated warehouses, the same number envisaged in Ocado’s biggest deal to date with U.S. supermarket group Kroger Co.It’s not surprising that Ocado Chief Executive Officer Tim Steiner has been tantalized by licensing the company’s software in Asia. Japan is the world’s fourth-biggest grocery market, according to industry researcher IGD. There’s also potential in other parts of Asia.But Ocado already has a lot on its plate, not least the Kroger partnership, where success is crucial to enhancing its credibility with clients and investors alike. The shares slumped earlier this month on concerns that its roll-out at one of the U.S.’s biggest traditional grocery retailers was progressing slower than expected. Ocado is also facing a new challenge from startup Takeoff Technologies. Like Ocado, which was started by three former Goldman Sachs bankers, its executives have Wall Street as well as grocery industry experience. But, rather than building giant state-of-the-art warehouses, it concentrates on making the process of picking groceries directly off of supermarket shelves for home delivery more efficient. This model has also been favored by Tesco Plc in the U.K.Ocado sought to reassure investors recently that the relationship with Kroger was on track, announcing the sixth location for what in industry jargon is called a fulfillment center. But given the importance of this contract, the fact that the U.S. is still the world’s biggest grocery market and that the group had been chasing tie-up there for years, it would have been better to keep it as its priority.When it comes to the capital available for investing in these big international partnerships, shareholders can take heart. Ocado’s sale earlier this year of a 50% stake in its U.K. online grocery business to Marks & Spencer Group Plc for up to 750 million pounds, boosted its coffers.Ocado said it had 1 billion pounds of headroom. With each warehouse costing about 30 million pounds, it has scope to build 30. Even with all the recent contract wins, it doesn’t expect to have to build more than 30 distribution centers, so it should have enough capital for its current commitments. Management bandwidth is another story. Next year, Ocado will be juggling the Kroger contract, getting Aeon off the ground and overseeing the transition to M&S becoming its grocery supplier in the U.K. That’s a lot to do. And let’s not forget its other contracts with Casino Guichard-Perrachon SA in France, Sobeys Inc. in Canada and Coles Group in Australia.The Aeon contract will also require yet more developers to prepare the technology too. Ocado estimates it will need to take on an extra 400 people to get the job done.Investors shrugged off any such concerns on Friday, with the shares rising as much as 15%. But Ocado has a history of unexpected items in its bagging area, from not having enough capacity in its warehouses to a fire at one of its robotic fulfillment centers in the U.K. earlier this year. Over-filling its delivery box increases the risk of more unpleasant surprises.((Corrects scale to trillion in first chart.))To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Tesco shares soared Monday (December 9). Up close to 6% in early trade. That was nothing to do with business at its core UK supermarkets. But about what might happen six thousand miles away. The retail giant said Sunday (December 8) it was reviewing its operations in Thailand and Malaysia. That after it received expressions of interest in the units, which generate about 10% of its profits. Tesco wouldn't give details of the approach. But analysts at Bernstein say the Asian operations could be worth over nine billion dollars. The firm is five years into a UK-focused recovery plan launched by boss Dave Lewis. It came after an accounting scandal capped a big downturn in trading. Tesco has already sold units in South Korea and Turkey. Any new sale would raise questions about its remaining overseas operations in central Europe.