Tesco moved one step closer to getting on top of its bloated property portfolio today, sealing a £733m deal with British Land to take back control of 21 of its superstores. But chief exec Dave Lewis took one step backwards in his bid to reshape his leadership team, with online director Simon Belsham's departure to become boss of Notonthehighstreet.com (NOTHS).
To the property first. The ‘big four’ supermarkets are staggering under the load of too many superstores, bought in the so-called ‘space race’ before they realised too late consumers were fleeing fast to convenience stores and the internet, as well as German discounters Aldi and Lidl. Morrisons wrote a whopping £1.3bn off its creaking property empire last week, Sainsbury’s clocked up a £600m-odd impairment in November. Analysts expect Tesco to write up to £1bn off its real estate in its annual results next month.
In exchange for the £352m, 50% stake in the 21 superstores and £96m in cash, British Land is getting Tesco’s 50% share of three retail parks and three shopping centres ‘anchored’ by its stores. ‘It further reduces our foodstore weighting,’ the company said - no doubt a sensible idea given the trouble large supermarkets are in.
It ‘allows us to increase our ownership and thereby insulate more of our businesses from indexed rent reviews,’ Lewis said. ‘We have a long way to go but it's a transaction which takes us in the right direction. This agreement makes our business simpler and stronger.’ And make it easier to shut down any underperforming ones and sell them off for homes, should that take his fancy.
Lewis may not be so pleased that the highly-rated Belsham is jumping ship in May to take charge of NOTHS, a fast-growing online marketplace where small businesses flog their wares to middle class consumers. Before heading Tesco.com for two years, he was Tesco’s multichannel development director and then director of non-food at Ocado, so a pretty good catch for an upstart like NOTHS.
‘Simon’s entrepreneurial background and commitment to SMEs will fit well with the ethos and ambitions we have developed at notonthehighstreet.com,’ said co-founder Holly Tucker, who stepped back from the chief exec’s chair to become president late last year.
And he’ll inherit a business in rude health: it raked in record sales of £127m last year, up 53% on the year before. The same definitely can’t be said for Tesco.