Tesco still has plenty to prove

Tesco announced a solid set of results this month. But investors are still worried about its takeover of food wholesaler Booker.

Tesco announced a solid set of results this month. Exceptional costs relating to its pension deficit and the 2014 accounting scandal led to a big drop in pre-tax profits, but operating profits improved to £1.28bn, 30% higher than the year before.

Despite signs of progress, the supermarket's shares fell "to the bottom of the FTSE 100", says Daniel Grote on CityWire Money, as the planned £3.7bn takeover of food wholesaler Booker "continued to worry investors". Tesco chief executive Dave Lewis defended the takeover, saying that it "will bring together two complementary businesses, driving additional value for shareholders by realising substantial synergies".

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However, the firm is under pressure from "two of its biggest shareholders", Schroders and Artisan Partners, to drop the deal, says Andrea Felsted on Bloomberg Gadfly. They would prefer Tesco to "focus on turning round its own business instead". Lewis needs to "convince investors suffering a crisis of confidence that integrating Booker won't derail what progress he has made".

Quite right, says the FT's Lex column. "Recovery in the core business needs to be entrenched before embarking on such adventures." The "higgledy-piggledy trajectory" of Tesco's share price suggests "the market is still not convinced by its strategy". The improvement in its figures is "creaking along" but that's simply not good enough.

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A masters of business administration (MBA) degree is "terrific at telling people how to make money quickly", says Alex Brummer in the Daily Mail. But it is hopeless at creating better capitalism, as shown by the way that "all manner of corporate ineptitude has come to light" recently. Barclays' CEO "found himself on the naughty step" over his pursuit of a whistle-blower. Lloyds Bank had to be "dragged kicking and screaming" to offer compensation to fraud victims. And then there were "the horrific scenes" from United Airlines (see page 31). All demonstrate the "cloth ears" of bosses who don't grasp "how bad decisions can go viral". In each case, "the simple phrase the customer is always right' would have served far better than an MBA".

A rumoured edict from Number Ten declares that "any company caught making negative remarks about Brexit will be frozen out of access to Downing Street", says Jim Armitage in the Evening Standard. So HSBC's decision to "stick its head above the parapet" will not go down well. Clients are asking for trades to go via Paris rather than London, the bank said, and firms are "looking to flip their headquarters from London to Europe" as the risk of a hard Brexit grows. "Pretty much every senior banker privately says the same," says Armitage. Theresa May must listen. Having the people who run the world's biggest financial institutions "cowed into silence surely helps nobody".

Anyone who's been in one of WH Smith's high-street shops might wonder how the firm stays in business. If only Stephen Clarke, WH Smith's chief executive, could herd customers in and "lock the doors behind them", life would be so much easier, says Kate Burgess in the Financial Times. After all, the strategy "works like a doozy" at its airport shops, where shoppers have "bigger worries than the price of a bottle of Evian water".




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