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Thu 23rd Jun 2016 - Tesco sells Harris + Hoole to Caffe Nero
Tesco sells Harris + Hoole to Caffe Nero: Tesco has sold its coffee shop brand Harris + Hoole to Caffe Nero for an undisclosed price. The move comes two weeks after Giraffe was sold to Boparan Restaurant Holdings. Tesco took full ownership of the loss-making Harris + Hoole in February, despite total losses of £43.5m since incorporation. Turnover stood at £12.8m in the most recent year. The stake in Harris + Hoole was acquired by former Tesco boss Phil Clarke as part of his efforts to revive the fortunes of the chain’s big out of town supermarkets. Harris + Hoole has 43 outlets, including 29 in Tesco stores, and employs more than 500 people. In November 2015, Harris + Hoole reported total losses had reached £43,583,894. It did, however, report the majority of its shops have turned to profit now although its losses more than doubled to £25,573,368 for the 52 weeks to 1 March 2015 – it lost £12,799,795 the year before. The losses for the most recent year were also circa double turnover of £12,840,302, which was up from £6,648,270 the year before. Of the year, the company stated: “The business opened 22 new shops and closed the six shops previously announced in September 2014, taking the total open at the end of the period to 45. The operating loss of £21.6m reflected significant impairment taken on a number of properties and other assets of £9.8m. As the business exited the year and into 2015-2016, the majority of shops have turned to profit after the early life-cycle of opening in the formative years of the business.” Meanwhile, Tesco group like-for-like sales grew by 0.9% for the 13 weeks to 28 May 2016, with positive like-for-like sales growth in all regions. Including a small contribution from new store openings, total sales grew by 1.1% at constant rates. At actual exchange rates, sales grew by 1.8% including a 0.7% positive foreign exchange translation effect due to a weakening of sterling, principally against our European currencies. The results of Kipa, its business in Turkey, have been excluded following its proposed sale, which was announced on 10 June. It stated: “In the UK, the launch of our seven new exclusive fresh food brands in March has helped to meet more of our customers’ shopping needs, further removing any reasons for them to shop elsewhere. Customers are able to save nearly £1.60 – about 17% – off the cost of a typical basket of ten of the most popular meat, fruit and vegetable lines by choosing to buy products from the new ranges. Two thirds of customers have now bought products from the new ranges and customer satisfaction scores of quality and taste are exceptionally high, at more than 90%. Customer ratings for the quality of our fresh food offer as a whole have improved to their highest level in more than two years. We continue to reinforce our brand proposition by giving customers lower, more stable prices they can trust across their whole shopping basket. Underpinned by Brand Guarantee, and including the investment in our fresh food brands, the cost of a weekly shop at Tesco is now 6% lower than it was in September 2014. We have continued to redirect coupon spend into lowering shelf-edge prices and focus promotional spend on the lines that matter most to customers. Our spend on couponing and number of products on multi-buy promotions in the quarter, were down by 38% and 42% respectively year-on-year. Availability continues at record levels, following the reduction of 18% of SKUs in our range resets which concluded in February. We are now working more closely with suppliers to enhance the uniqueness of our customer ranges, with exciting and exclusive new products. In partnership with suppliers, we are also reducing costs by improving efficiency and leveraging our scale, enabling us to fund further investment in the customer offer and continue to rebuild profitability. We have also continued to work on further optimising our store operating model, allowing us to run our stores more simply in addition to improving the customer shopping experience. Having stabilised the business, we have now built a strong operational foundation on which we can successfully overlay new customer propositions. Our measure of overall customer satisfaction has improved by a further 2% since the start of the year. The progress we are making has also been recognised by customers who voted Tesco ‘Britain’s Favourite Supermarket’ at the Grocer Gold Awards last week. As part of our effort to streamline the customer experience across our mix of formats and channels, this month we will complete the integration of the customer websites for Tesco Direct and F&F. The rate of sales growth in online grocery has continued to moderate, as expected, reflecting the changes we made last year to improve the sustainability of the offer. Following on from the agreed sales of Dobbies Garden Centres and the Giraffe restaurant chain, we are announcing today the proposed sale of Harris + Hoole to Caffe Nero. Together, these sales allow us to place even greater focus on our core UK business. Like-for-like sales performance in the Republic of Ireland remained positive as we have continued to make improvements across the offer, including further investment in price reductions across core food lines.”


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