Tesco

EdGasketTheSecond

"Tesco has announced that it is repaying the £585m worth of business rates relief that it received as support during the coronavirus pandemic."

Now that is after they have incurred £735m of extra costs due to the coronavirus pandemic (over half their profits).
Do we live in a communist state where all profits have to be returned to the government?

What about the risk I took investing in Tesco through the pandemic? What about my losses on other shares due to the pandemic? are the government bailing me out on those? NO.

I expect my company's profits to be kept in the company along with other assets that belong rightly to the shareholders; not given away to a government that prints currency out of thin air and doesn't need it. In fact the government want money in the economy which is why they are doing QE; they don't want it handed back.

Now do-gooders will say what a morally responsible thing Tesco have done and they and the press will put pressure on others in the sector to do likewise which is why in a rising market today, all supermarkets are down. The first big decision of new CEO Ken Murphy; let's hope shareholders vote him out at the earliest opportunity, idiot.

veryintrigued

Fantastic news.

Whilst we all may question the likes of Tesco's morals now and again this is tremendous news for the British taxpayer.

Sailtheworld

They've assessed that overall it's better for shareholders to return the government money rather than keep it. It's a business decision.

As you say the media will now put pressure on their competitors. They're all going to have to give all or some of this money back so may as well do it with good grace and get some decent publicity.

webjaved

They could have just given me a few million, every little helps.

arnoldy

Good news and lets see Co-op and Waitrose follow suit - after all they are the ones quick to smother themselves in the ethical flag and preach at the plebs.
But they are usually first in the hypocrisy stakes, I hope to be proved wrong and Waitrose and Co-op will do the right thing.

Thrugelmir

That's the way to spend your advertising budget. What excellent PR in the run up to Xmas. 

Over time we'll hear about the companies that defrauded the UK taxpayer. Not going to help their business longer term. 

bowlhead99

Sailtheworld said:

They've assessed that overall it's better for shareholders to return the government money rather than keep it. It's a business decision.

Yes completely agreed.  I don't think the best thing to do is for the shareholders to revolt and kick out the CEO. The government gave a big stimulus package to retail businesses because lots of them faced not being allowed to open, and to support businesses in general the rates relief was necessarily given out willy nilly rather than on a completely granular review, case by case basis.  Tesco did suffer business interruption and extra costs, but were not required to close and instead went on a hiring frenzy to meet the supply and demand challenges.  You could say that they are a clear example of a business that didn't need local or central government to pay their premises costs for them.

Other big businesses have proudly returned rates relief and/or furlough money as a badge of honour.  Alternatively, they can have all the nation (their customer base of millions and millions of people) grumbling not only that big supermarkets have contributed to the death of the high street (before the death of the high street was exacerbated by Covid) but also that the big supermarkets (with Tesco the biggest, making 50 billion pounds a year of revenue) have stayed open through Covid squeezing every last drop of revenue 24 hours a day for some stores, while effectively taking a government handout / taxpayer money to help them pay their rent and rates. It's a PR disaster waiting to happen if some smaller rival like Sainsbury or Morrisons or B&Q or Halfords or a proud family corner shop say they are giving back the unneeded relief while Tesco are sitting there reluctantly saying, "you can't have it back because we found something better than PR to spend the money on so the money is all gone, and because we had a decent year in the end we're paying all our profits out to our owners as a tasty dividend".

Do we live in a communist state where all profits have to be returned to the government?
What about the risk I took investing in Tesco through the pandemic? What about my losses on other shares due to the pandemic? are the government bailing me out on those? NO.

You did take a risk on investing in which you might lose money (or not gain as much money) as you hoped. So of course there will not be a bailout for you and your ellow owners from the State.  You should have done as you were suggesting on your other threads and dumped most of your shares to fuel your purchases of gold and silver Or invested in other industries which stood to make better profits based on the economic circumstances. The share price is off by about 5p today, which is nothing in the grand scheme of things - daily or weekly movements in the sector over the last year will often be several pence.

realaledrinker

Don't forget to net off the extra bog rolls, pasta, flour etc that they sold

Thrugelmir

By doing so. Tesco also negate the threat of a levy from the Treasury on having performed exceptionally well during the pandemic. 

EthicsGradient

realaledrinker said:

Don't forget to net off the extra bog rolls, pasta, flour etc that they sold

Or (maybe more importantly, since the long term consumption of the above items probably hasn't changed that much) the increase in food to eat while working from home, and in off-licence alcohol sales replacing pub sales (given your moniker).

EdGasketTheSecond

Thrugelmir said:

That's the way to spend your advertising budget. What excellent PR in the run up to Xmas. 

Over time we'll hear about the companies that defrauded the UK taxpayer. Not going to help their business longer term. 

I don't think your average supermarket customer gives two hoots about whether business rates have been paid, not paid, or repaid. What they want is low prices and reasonable quality/service. Tesco could have had much better PR by spending the £585m on a Christmas bonus for the employees who have had to face virus risk from customers over the period. I would have no objection to that but to pay it to the government is just nuts.