U.K.'s Tesco Sells Blinkbox, Puts Dunnhumby Under Review

The U.K.'s Tesco plc on Thursday, Jan. 8 , made a cautious start to a long-awaited disposal program, announcing it would sell a video streaming business and its broadband unit to TalkTalk Telecom Group plc and that it had appointed advisers to consider the sale of the far larger Dunnhumby data-analytics business. Announcing a trading and strategy update following a string of profit warnings at the U.K.'s largest grocer and the shock disclosure in the fall that it had overstated a profit estimate, recently arrived CEO Dave Lewis also said he would close 43 stores, cut capital expenditure by £1 billion ($1.5 billion), shutter the group's Cheshunt, southeast England head office, scrap a final dividend and install Halfords Group plc CEO Matt Davies as boss of Tesco's U.K. and Ireland business from June. Tesco also posted a better-than-expected performance over the six-week Christmas period, noting that same-store sales had declined by 0.3%. The 19-week decline slowed to 2.9% from 5.4% in the second quarter. Tesco also maintained its existing pretax profit forecast of "no more than £1.4 billion" for the current fiscal year after several previous downgrades. "We have some very difficult changes to make. I am very conscious that the consequences of these changes are significant for all stakeholders in our business but we are facing the reality of the situation," said Lewis in a statement. " Our recent performance gives us confidence that when we pull together and put the customer first we can deliver the right results." Tesco shares in London on Thursday morning were up more than 7% at 194.95 pence, valuing its equity at £15.8 billion. Dunnhumby is expected to fetch about £2 billion. Media reports late last year suggested TPG was pursuing the business. Analysts have also tipped Tesco's Asian business, and Tesco's banking unit, among potential disposal candidates. Tesco didn't say who would advise on the Dunnhumby review. Lewis also said Tesco will seek efficiencies that will deliver annual savings of £250 million at a one-off cost of £300 million. Measures will include central overhead cuts, store manager "simplification" and "increased working-hour flexibility." He didn't give numbers for job cuts. TalkTalk CEO Dido Harding said the purchase of video streaming services blinkbox and Tesco Broadband will enhance its quad-play offer and "help to further drive home our value for money advantage." Read more from:

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