Tesco plans sale of Clubcard data company dunnhumby

The UK’s largest supermarket chain is selling off significant assets in its efforts to turnaround the business, following profit warnings and a major financial misstatement last year. It has started with the sale of Tesco Broadband and film streaming service Blinkbox to ISP TalkTalk today, in a deal estimated to be worth £5 million.

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Tesco is looking for a buyer for dunnhumby, the data and shopper insights company behind its Clubcard loyalty programme.

The UK’s largest supermarket chain is selling off significant assets in its efforts to turnaround the business, following profit warnings and a major financial misstatement last year. It has started with the sale of Tesco Broadband and film streaming service Blinkbox to ISP TalkTalk today, in a deal estimated to be worth £5 million.

Further, in a trading update today, Tesco CEO Dave Lewis said that the company has hired Goldman Sachs as advisors to look at options for dunnhumby, after deciding that Tesco did not need to own the data insights firm in order to benefit from its services.

He told analysts that dunnhumby needs investment in its business, and added: “We’re saying we’re open to any and all possibilities with that.”

Lewis insisted that Tesco’s Clubcard loyalty programme was still a significant part of the retailer’s strategy, however.

“It doesn’t mean a different future for Clubcard,” he said.

Black Friday boost

Like House of Fraser and John Lewis earlier this week, Tesco said that its Black Friday promotions resulted in the highest week of sales on record for its online general merchandise business, Tesco Direct. This contributed to 22.2 percent sales growth in online merchandise for the Christmas period, it said.

Tesco’s online groceries business also saw growth over the festive period, with a 12.9 percent increase in sales and a “significant increase” in the proportion of customers taking advantage of the supermarket’s Click & Collect locations.

Getting back to innovation

As part of its strategy to turn around the business, Lewis told analysts that he wants Tesco to become more innovative, referring to a trial of a digital wallet technology currently available in some parts of London, called PayQwiq, which allows customers to connect their Clubcard with their bank account and pay for goods via an app on their smartphone.

“Getting Tesco back to being innovative in its core is a key part of the business,” he said.

As well as announcing the sale of Tesco Broadband and Blinkbox today - which includes around 75,000 broadband and 20,000 voice households - Tesco revealed that Matt Davies, CEO of bike retailer Halfords, will be joining as CEO of UK and Republic of Ireland at the end of May.

Lewis said that Davies joins with extensive experience in retail as well as with turning around businesses.

Marks and Spencer also reported results today, revealing its online business was hit hard by distribution centre problems that occured following Black Friday promotions.