The clocks have gone back and the countdown to Christmas – a key season for UK retailers – has started. The SIF folio’s exposure to retail is through two businesses, Tesco and Bloomsbury Publishing.
Both positions are showing a profit, but it’s Tesco that concerns me today. The UK’s largest supermarket has been in the SIF fund for nine months now, which means it’s due a review.
In my original write-up on Tesco in January, I said that I rated the partnership of chairman John Allan and CEO ‘Drastic’ Dave Lewis very highly. I said that “with no sign of either man departing”, I was comfortable with the outlook and happy to buy Tesco stock.
That situation has changed. Mr Allan and Mr Lewis remain in post, but Drastic Dave has given notice that he plans to leave next year, saying that the job is done.
In some ways I’m not surprised. Mr Lewis was hired as a turnaround boss. I think he’s done a great job. Perhaps he’s not interested in the year-on-year grind of maintaining incremental growth while fending off the German discounters. I don’t know.
For long-term investors in…
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