LONDON (Reuters Breakingviews) - Tesco is sending investors into the arms of smaller grocers. Britain’s biggest supermarket by sales is charging lower prices in its home market to fend off discounters, making it harder to hit operating margin targets. Plans to double down with the launch of a new chain of bargain grocery stores will make the challenge even harder.
LONDON (Reuters Breakingviews) - Unilever, only has itself to blame for a growing shareholder revolt in Britain. Loose ends in its plan to pick Rotterdam over London as its global head office have left the consumer giant vulnerable.
LONDON (Reuters Breakingviews) - Coca-Cola is paying a highly caffeinated price for a global coffee hit. The American soda giant has joined the battle to satisfy consumers’ thirst for java by paying $5.1 billion for Costa, the world’s second-largest chain of cafes. The deal requires Coke to order up new markets for hot drinks. Investors in seller Whitbread are the big winners.
LONDON (Reuters Breakingviews) - Rolls-Royce investors are keeping their seat belt fastened despite the promise of an increasingly smooth journey. The British plane engine-maker aims to generate 1 pound of free cash flow per share over the mid-term, quadruple this year’s estimate. Despite the bullish new target, shareholders don’t look to be pricing it in fully. A distant horizon and history of one-off costs suggest why.
LONDON (Reuters Breakingviews) - An important ruling by Britain’s Supreme Court on workers’ rights leaves many big questions about the so-called “gig economy” unanswered. The court’s decision that a self-employed plumber is entitled to workers’ rights is ominous for companies like Uber which depend on casual labour. But it offers little new guidance for dealing with technology’s impact on the way people work.
LONDON (Reuters Breakingviews) - J Sainsbury’s 7.3 billion pound bid for Asda shows the need for new antitrust thinking. The grocer wants Britain’s Competition and Markets Authority (CMA) to vet retail mergers in a new way. The rise of discount rivals and online shopping means it has a point. A revamp of the metrics used to ensure that shoppers have enough choice is inevitable.
LONDON (Reuters Breakingviews) - J Sainsbury will try to succeed where Walmart flopped. The British grocer is buying the U.S. retail giant’s Asda subsidiary for 7.3 billion pounds in cash and stock. Even after passing on some cost savings to shoppers, Sainsbury’s could make a double-digit return on investment. That’s unless demands from competition authorities eat into the benefits.
LONDON (Reuters Breakingviews) - KFC’s penny-pinching ways have left it stuffed. The fried-chicken chain owned by Yum Brands had to close hundreds of its UK restaurants after running out of poultry. Its plan to cut costs by ditching its old food supplier for a cheaper one backfired. The cock-up shows that chasing higher margins is no sure way to feather your nest.
LONDON (Reuters Breakingviews) - Heineken’s number two status comes with marginal costs as well as benefits. The Dutch group is one of the few global brewers still managing to boost beer volumes. However, acquisitions will weigh on its operating margins in 2018.
LONDON (Reuters Breakingviews) - Nestlé is making its board more activist-friendly. The chief executives of Adidas and Spain’s Inditex are among the heavyweight non-executive directors that the Swiss giant is proposing to appoint. Their e-commerce expertise will help steer efforts to sell more directly to consumers. They may also help to pre-empt any plan by activist Dan Loeb to install his own candidates.