The City appears to believe that Tesco has hired Harry Potter as its new chief executive while casting poor old Philip Clarke in the role of Voldemort.
How else to explain the fact that its second profit warning in short order saw a rise in the grocer’s share price. No, you didn’t misread that. Tesco said trading had been even worse than people had feared and yet the shares actually went up.
What wizardry is this? It’s Unilever’s Dave Lewis, that what it is. Alongside the profit warning was the announcement that the marketing magician from Unilever will be taking on Mr Clarke’s job.
This is a man with no experience of running a retailer and whose biggest claim to fame, until now, was those adverts for Dove soap featuring “real women” in white bikinis. Turning a campaign into a talking point with the help of a bit of (semi-)nudity doesn’t exactly require magical powers. It’s a conjuring trick, and not a terribly original one.
And yet Tesco shares are on the up. Perhaps there’s a reason for that. A lot of the hard work has already been done by Mr Clarke. He pulled Tesco out of its disastrous American adventure and correctly identified the problem with its antiseptic and unfriendly UK stores. He told the City it would have to accept that he needed to pump money into giving stores a spruce up while hiring extra staff to keep customers happy. He also said he’d cut prices.
Video: Philip Clarke - 'He just didn't move fast enough'
Unfortunately, if you’re the man who has to tell the City that it’s going to have to accept less, you run the risk of getting shot at the best of times. Mr Clarke might still have got away with it had his turnaround programme delivered quick results. But it didn’t, in part because its implementation left something to be desired.
Happily for Mr Lewis – who probably knows Tesco as well as any outsider could from his previous role selling to it – he will be given a period of grace during which he can blame problems on his predecessor while taking credit for any green shoots that might appear.
Unlike Mr Clarke, he also has an opportunity to dictate terms to the City should he decide there is a need to sink even more money into price cuts. If he’s sensible he’ll make use of it.
The big question is whether he can turn style into substance. The City is clearly betting he can, based on his work at Unilever.
But Tesco isn’t the first beleaguered retailer to have turned to a skilled communicator with a fondness for fancy ads featuring bikinis. See under the heading Spencer, Marks &, where the results were rather mixed.
Will they be any better at Tesco? It’s certainly paying like they will. In addition to a basic £1.25m salary (£110,000 better than Mr Clarke’s), it’s stumping up the £525,000 bonus Mr Lewis would have received from Unilever had he stayed, plus a bunch of share options.
Mr Lewis stands to make magic money even if his wand starts to fizzle.
Treasury U-turn might still lead the wrong way
From the pasty tax to the block on Royal Bank of Scotland’s attempts to pay its bankers bonuses of twice their basic pay, George Osborne’s Treasury has acquired something of a reputation for U-turns.
The latest – over the provision of advice on what people should do to with their pension pots when they retire – appears to be one of his department’s more sensible changes of heart.
Having handed Britons the freedom to do what they want with their pension savings it had been intended that they would get advice on what to do next from their pension providers, for which read: life insurance companies.
Giving the latter this responsibility immediately caused controversy because it looked akin to giving a small child unsupervised access to a tin filled with chocolate biscuits. The rotten reputation that advice from insurers has is well earned.
Of course there were going to be rules, and regulations, and safeguards built into the system to make them behave themselves. But this an industry that is attracted to scandal like a moth to a flame.
Just last year it emerged that Lloyds Banking Group had been operating what amounted to a sell-or-be-sacked culture that led one hapless individual to mis-sell life insurance policies to himself in a vain attempt to meet his monthly targets (for which Lloyds copped a £28m fine).
The question now, however, is whether the alternative (sort of) worked up by the Treasury will really be that much better.
Under the new plans pension providers will merely have to tell their clients that advice is available.
They will then be directed to one of the Government’s “delivery partners” (oh dear) such as the Pensions Advisory Service or the Money Advice Service (oh dear, oh dear). From whom savers will be able to request a sit-down meeting if they want one (and now you can add a third “oh dear”).
Quite apart from the fact that getting this in place by April 2015, as promised, is going to be a real stretch, the Treasury Select Committee has cast grave doubts on the MAS’s abilities, and recently came close to recommending that it be wound up.
Now that service is apparently going to play a key role in the delivery phase of “pension freedom” – one of Mr Osborne’s flagship reforms.
It looks horribly like a U-turn that might have saved soon-to-be-pensioners from the devil has instead cast them into the deep blue sea.