Dave Lewis, the CEO of Tesco, gave a great quote this morning after announcing a staggering loss of £6.38billion, their biggest ever loss and the sixth-biggest announced by any UK company.
“We are starting to see some very encouraging signs”.
Classic CEO stuff and I can only assume that he must have worked in radio at some point and learned a lot about how to deal with disappointing RAJAR results.
Running a business is never easy though and when I started, I was taught a number of things by a number of wonderful people.
One of the most important centred on cash flow. Far too many businesses have bitten the dust, not because they didn’t have a great product, but because they ran out of cash. It is the number one rule I hammer home to every new start-up. In part, some of these were victims of the larger companies who drilled their profit margin to the bone and then made them wait months before paying out.
Another learning was around the reporting of numbers.
An old boss of mine believed very strongly that if you were going to have a bad year, then make sure it is a really, really bad year. Get all the crap, all the debt, all the stuff you’ve been hiding away and throw it all into the mix. Write off the past and build for tomorrow. If you can shower some of the blame on previous management, even better.
These numbers from Tesco had everything but the kitchen sink in it as management did just that. And rightly so!
If you’re going to get hung then get hung, drawn and quartered at the same time – but importantly, live to fight another day. Make sure the following year is a belter.
Another classic CEO line is to suggest that while these numbers are bad, more bad news might follow. I doubt it. What will happen is that the next set of figures will be brighter, the shareholders will be smiling and Dave will be a hero.
Tesco have always had a dodgy past though, few in this industry have a great one to be honest. To compete, many have treated their suppliers badly, constantly driving down their profits while, at the same time, making them wait months to be paid. There will be many therefore who believe they deserve it. Hail the discount stores who are eating their lunch.
Personally, I never got the ‘build everything big mentality’. Tesco always seemed to offer us more while never asking if it was more than we wanted.
Don’t feel sorry for them. They still have the biggest share in this sector my some distance. However, from today I’ve decided to only shop at Tesco for a full month in order to help them out. All companies go through difficulties.
That said, it is the view of the City that matters most so how have they reacted today?
In the first hour of the announcement, the share price was up!
PS. The CEO has just announced that they are No 1 for 35-44 year old females shopping at midnight in Chelmsford. That RAJAR training never leaves you!