Tesco has finally decided to pull the plug on the much-hyped sale of DunnHumby, amid claims that it had been a “farce from start to finish” and despite its balance sheet looking decidedly worse for wear.
The decision was announced this morning in the company’s interim results, which contrary to assurances that chief executive Dave Lewis’ turnaround plan was working, revealed profits more than halved over the first half of its financial year, crashing from £779m to £354m.
All the statement said about the collapse of the DunnHumby deal was: “Portfolio reshaping concluded; DunnHumby retained following comprehensive strategic review.”
Back in April, it was claimed a deal was imminent after Tesco said the sell-off was “well advanced”. However, two weeks ago, it emerged that out of all the potential suitors for the data business just WPP was still hanging on. Yet, with the potential of the deal drastically reduced following the demise of its partnership with US retail giant Kroger and the prospect of a repitch for the Clubcard account within five years, even Sir Martin Sorrell obviously could not see a way to make money.
At one time, there were at least half a dozen companies circling the business, including General Atlantic, Permira with Google; Apax Partners, CVC Capital, and even Experian.
One insider said: “The whole thing has been farcical from start to finish. God knows where the £2bn valuation came from in the first place. But to then withdraw its most profitable partner and expect the winning firm to repitch for Clubcard, it is difficult to see what was left to buy.”
Today’s results also show that life-for-like sales have fallen by 1.1%, and the group warned that trading conditions remained challenging. But the figure was better than the City had feared and Tesco said its international sales had returned to growth for the first time in three years, albeit rising by just 1%.
Pre-tax profit reached £74m, compared with a loss of £19m for the same period last year.
An upbeat Lewis said: “We have delivered an unprecedented level of change in our business over the last 12 months and it is working. The first half results show sustained improvement across a broad range of key indicators.”
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