Every little helps: Tesco executive sold shares before profit warning
A senior Tesco executive sold more than £200,000 of shares in the supermarket a week before its first profit warning in 20 years wiped nearly £5bn off its market value.
Noel "Bob" Robbins, the grocer's chief UK operating officer, offloaded 50,000 shares at 404.5p each on 4 January and pocketed £202,255. By selling them 10 days ago, he made nearly £44,000 more than he would have done had he sold them yesterday, after the profits warning led to a further fall in Tesco's stock.
Tesco said Mr Robbins, a long-serving employee, had done nothing wrong because he sold the shares outside a period restricted by rules governing trading in shares, and he was not in possession of any "price-sensitive information" at the time.
However, the transaction has raised eyebrows because it took place only eight days before Tesco issued its first profits warning in 20 years. A market source said he could understand how the share sale might be interpreted by those outside the supermarket.
It was also another unfortunate surprise for the City from a company which has been a stock market darling for more than two decades. Mr Robbins – who sits on Tesco's UK management committee but not its main executive board – made the transaction outside the so-called "closed period", when shares transactions among directors are prohibited. Tesco's closed period ran from 7 January until the issue of its trading statement on Thursday.
A spokesman for Tesco said: "Bob Robbins sold less than 5 per cent of his substantial shareholding in Tesco for necessary family expenditure. The sale, which was not made within a closed period, was approved in the usual way. We are confident [he] was not in possession of any price-sensitive information at the time the sale was approved. Tesco did not complete its Christmas trading period until after the sale was made."
By "price-sensitive" information, Tesco is referring to its decision to invest hundreds of millions of pounds in its UK stores, such as by increasing staff numbers to improve customer service, and by improving its product ranges. The spokesman added: "Bob was not party to discussions around the profit guidance or the investment plans at the time he made his sale." The talks were said to have taken place among only a few of the main board members.
Another director, Ken Towle, who runs Tesco's online business, sold 40,193 Tesco shares at 385.6p on 22 December, earning about £155,000. However, the firm said these shares represented less than 5 per cent of Mr Towle's holding and were sold for personal reasons. Every Tesco director was legally allowed to buy or sell shares in the period between the company's previous trading statement on 8 December and 7 January.
Mr Robbins returned to the UK as chief operating officer last March. He has served as chief executive of Tesco's central and eastern European businesses, as well as strategy and development director in Asia.
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