One of the tihings UK adland is looking forward to this year is BBH’s debut campaign for Tesco (the business moved there from Wieden+Kennedy without a pitch in January).
We’re also still waiting to see who wins Tesco’s media account, MediaCom or incumbent Initiative.
This is the second biggest loss by a non-bank UK company on record, according to the FT, pipped to the post only by Cable and Wireless’ £6.4bn in 2003. Bet Tesco was rather keen not to lose another £200m or so.
If Tesco really had lost £6.38bn there wouldn’t be a Tesco (retailers, unlike banks, don’t get bailed out by the taxpayer). Lewis and his advisers have ‘just’ taken the knife to Tesco’s inflated assets, most particularly its property and the land bank it has acquired and no longer needs.
But there’s real money involved too. The pension fund is £3.9bn short and the company’s borrowings have ballooned from £6.6bn to £8.5bn. Such borrowings didn’t matter much when Tesco was making £3bn a year (or said it was). But they do when your trading profit before the vast rag bag of exceptional items has slumped to £1.4bn as it did in 2014. This year’s numbers may be worse even though Tesco’s sales are inching ahead for the first time in years. So the UK’s biggest retailer is, in effect, being kept afloat by its bankers.
BBH’s debut campaign, due quite soon, has become doubly important now. It doesn’t just need to appeal to Tesco customers but also needs to reassure investors (who marked the shares up yesterday) and the world at large that Tesco has a viable new strategy in place.
No pressure there then.