Morning business news - April 17Wednesday 17 April 2013 11.45
TESCO'S PULLOUT FROM US TO COST IT OVER £1 BILLION - Tesco is pulling out of the US and announced plans today to abandon the Fresh & Easy brand under which it had been trading there. The US expansion has not performed well for Tesco and it will have to take a hit to its profit after tax of £1.2 billion as a result of that move. Tesco said today that its sales for the year to the end of February rose by 1.3% to £72.4 billion
The company does not break down its figures for Ireland, but it said its like-for-like sales - which excludes the impact of any new shop openings - fell by 0.3% - a slower rate of decline than the 2.4% drop over the previous 12 months.
Mark Murnane, of Shelbourne Markets, says that Tesco has witnessed something of a perfect storm in recent years. It expanded into the US in 2007 at the heart of the sub-prime housing market, while the economy in its main market in the UK is facing a triple dip recession. Mr Murnane also says the supermarket giant is being hit by the growth of the low cost discounters such as Aldi and Lidl. He says that the group should have left the US much sooner. However, he points out that the company's online operations saw business rise by 30%.
Tesco's chief executive Philip Clarke has said that he wants to downsize the large hyper-market type size of outlet to make his stores more of a ''destination supermarket'', where people can go for a coffee and read a book after they do their shopping. Mr Murnane says that some analysts believe this strategy will not work.
MORNING BRIEFS - Personal computer sales are dropping like a stone, down 14% over the first three months of this year, and you can see that impact on Intel's results. The chipmaker, which is one of Ireland's largest multinational employers, made $2 billion between January and March but that was down 27% compared to the same period last year.
*** Today is Ireland day at the London Stock Exchange. The LSE's opening bell was rung at 8am by a group of Irish business people including former attorney general Peter Sutherland and Dermot Desmond. There are 25 Irish companies quoted on the main market of the London Stock Exchange with a current market value of almost €46 billion. That includes the likes of CRH and Kerry Group. Many successful Irish people are also working at top companies in Britain.
*** The chief executive of the fashion retailer Next gave his £2.4m bonus to the company's staff according to its annual report. Lord Wolfson, a Tory peer, gifted the £2.4m bonus award to the 19,400 staff who have been with Next since 2010. That's around £124 each. His total pay packet was £4.6m last year, a 13% rise on the 2011 figure.
*** Swiss banks are the highest payers in the world according to a report by the consultants SNL. Credit Suisse paid its staff an average €215,000 last year to top the list. Just behind it was compatriot UBS, where the average employee took home €191,000. German bank Deutsche was third - this makes it the top paying EU bank on the list. It will thus be first in the firing line when new EU rules on bank pay and bonuses come into force.