business news in context, analysis with attitude

• In the UK, the Observer writes that Tesco this week is expected to announce a 10 percent drop in group profits. Here's what the paper has to say about that...

"Shareholders will have steeled themselves for the bad news and are now likely to more interested in whether the turnaround plan announced by (CEO Philip) Clarke in April is working. The money is being spent on sprucing up stores, hiring extra store staff and a long overdue revamp of its own-label foodstuffs. The plan is not rocket science – in fact, it reads like basic good housekeeping for a retailer the management textbooks have led us to believe is among the best in class.

"How the UK stores ended up in such a sorry state remains a moot point and Clarke avoids assigning blame. The less diplomatic would point to the reign of his lauded predecessor, Sir Terry Leahy, who used profits generated at home to plant flags abroad but starved the home market chain of investment."

The story goes on:

"Britain is not Tesco's only problem. Clarke is still grappling with the loss-making US chain Fresh & Easy and a setback in South Korea, Tesco's biggest overseas market, where legislation allowing local governments to impose shorter trading hours is hitting sales. But there is also a larger dimension to the depressed Tesco share price. After years of celebrating it for its reliable returns, investors have lost their appetite for the grocery sector as a whole, reappraising it in a new world of turgid sales where shoppers are increasingly turning to the internet to make purchases."
KC's View:
Likely not to be a good week for Tesco. It is interesting, by the way, how the history of the Terry Leahy tenure is beginning to be rewritten.