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“There is never a good time to move on,” said Mike Coupe, but he’s wrong. Now is an ideal moment for him to leave Sainsbury’s.
The failed bid for Asda was so juddering for the company that it wasn’t even mentioned in the soapy farewell messages. Reinvigoration tends to be easier under a new boss and, since Coupe has had almost six years at the helm, retiring in May to spend more time with his guitar should suit all parties.
The chairman, Martin Scicluna, described Coupe as “bold and ambitious on behalf of our shareholders”, which came closest to a hint at the Asda debacle. It points to a defence of the £7bn proposed deal as a punt worth taking. If the competition authorities could have been squared, runs the theory, Sainsbury’s would have been sitting pretty as an equal rival to Tesco in the UK.
It’s a point of view, but the proposal struck many of us as grossly anti-competitive from day one. The authorities ultimately took the same line, so don’t expect sympathy. A colossal £46m of shareholders’ money was wasted on lawyers, bankers, consultants and advisers. Worse, the distraction may have contributed to five quarters in a row of like-for-like sales declines.
Coupe’s other deals were smaller and superior. Argos hasn’t sparkled in the revenue line but at least Sainsbury’s bought the business on the cheap. Nectar looks promising in the age of data-driven loyalty marketing. Meanwhile, endless rounds of cost-cutting were unpopular but inevitable. The scorecard, though, shows a negative shareholder return of 12.7% on Coupe’s watch, according to Refinitiv data. Even in troubled supermarket-land, he will have hoped for better.
The new chief executive is Simon Roberts, who, like most retail and operations directors, will be billed as a nuts-and-bolts specialist. If so, that’s useful – but he’ll need other qualities because Coupe was basically right about the need to find new ways to stay competitive against the discounters.
In the meantime, be amazed that our top three quoted grocers – Tesco, Sainsbury’s and Morrisons – have still never appointed a woman as chief executive, despite the retail industry having a predominately female workforce. Presumably they also think it’s never a good time.
Digital tax row will dampen optimism over UK-US trade
The digital services tax, which is intended to impose a 2% duty from April on the UK revenues of large technology firms, was a justified response to some firms’ footloose tax arrangements, most observers thought. It’s not even meant to be permanent; it’s just a holding position until the OECD gets its act together on digital taxation.
Chancellor Sajid Javid, however, probably wasn’t banking on his modest measure (£1.5bn of tax over four years) turning into a nasty row with the US.
“If people want arbitrarily to put taxes on our digital companies we’ll consider arbitrarily putting taxes on car companies,” Steven Mnuchin, the US Treasury secretary said on Wednesday. In other words: back off Amazon, Facebook and Google or the UK’s Aston Martin, Jaguar Land Rover et al will get hit.
France, which had plans for its own 3% levy, has caved in to similar intimidation (wine-related in its case), but Javid says the UK will go ahead. He could hardly say otherwise at this point. But the former chancellor George Osborne’s prediction that the Treasury will delay implementation sounds a reasonable way to bet.
Whatever the outcome, this affair should puncture the optimism that supposedly exists in UK boardrooms about the chances of an early trade deal with the US. Negotiations haven’t even started but the US is threatening a tariff war, in effect, unless the UK performs a humiliating U-turn on a very minor tax policy. The big stuff won’t be easier.
Losing chairmanship has bolstered Musk’s Tesla
Elon Musk at Tesla is one of the world’s “great geniuses”, says President Trump. Alternatively, you may think the electric car company, now worth $100bn, is one of the world’s most overvalued businesses.
But it’s hard to deny that Tesla looks vastly improved for a period of relative silence from Musk. He’s picked fewer fights on Twitter in the past year and hasn’t repeated his threat to take the company private.
Good production numbers may be the main driver of the surging share price but Musk’s effort to display seriousness will have helped. Losing the chairmanship, which happened after his last run-in with regulators, was the best thing that happened to him.
If Tesla remains at the $100bn mark for six months, Musk collects $350m under his ludicrous incentive arrangements. That is a strong incentive to shut up.
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