Recent Management Updates of Two LSE Listed Stocks: TSCO and BOO

Summary

• Tesco Plc faces massive shareholder revolt over Director’s remuneration
• Tesco Group’s chief executive, Dave Lewis will be leaving the company on 30^th September
• Top management at Boohoo could be in line for a £150 million bonus

General retailer group, Tesco Plc’s resilient performance in the first quarter of 2020 was undermined by massive revolts caused by the shareholders against approval of the Director’s remuneration. More than 67 per cent of the votes were cast against the approval of the Director’s remuneration. However, more than 99 per cent of votes were cast in favour of declaring a final dividend in its Annual General Meeting held on 26th June. The voting results came after Tesco (LON:TSCO) recorded a surge in sales amid the unprecedented crisis caused by the novel coronavirus. In the last one year, the pay of Tesco Group’s chief executive, Dave Lewis has increased by more than 30 per cent. This was possibly the reason for the objection raised by the shareholders. Lewis will be leaving the company on 30^th September and was supposed to get an annual cash bonus of £2.4 million and another £2.4 million long-term share bonus.

Highlights of Tesco’s business performance for Q1 2021

FTSE 100 listed retailer, Tesco Group recently announced its trading performance for the first quarter of 2020. The company’s total sales in its UK & ROI (United Kingdom & Republic of Ireland) segment increased by 9.2 per cent during the period. The company made major strides in its performance during the quarter as its online sales were up by 48.5 per cent during the period.

The change in shopping habits of consumers to buy consumables is quite evident. The industry has seen a substantial surge in online orders as people are encouraged to stay indoors and avoid public squares during the lockdown period.

The company has made quick adjustments to its business model to cater to the significant surge in online orders during the unprecedented crisis. The company is presently fulfilling over 1.3 million orders per week and has nearly doubled its online capacity in just two months. Tesco roughly delivered 12.6 million orders during the first quarter of 2020, which also included 590 thousand vulnerable customers.

In addition, the company has encouraged its customers for its “click and collect service”, which translates to nearly 25 per cent of orders received online. As a result of these quick adjustments, the online essentials business has delivered robust growth in the UK market.

However, the company has faced a substantial increase in costs during the unprecedented crisis posed by COVID-19. The increased costs are related to the increase in the size of the workforce as the company hired nearly 47 thousand temporary colleagues to meet the increased demand. Moreover, the company was burdened by the cost of safety-related consumables and personal protective equipment required to operate the physical stores.

Tesco Plc’s Stock price performance

Daily Chart as on 26th-June-20, after the market close (Source: Thomson Reuters)

As on 26th June 2020, Tesco Plc’s shares last traded at GBX 230.70 per share, up by 1.90 per cent as compared to the previous day closing price level. The company’s market capitalisation was around £22,172.48 million.

Tesco Plc’s shares have clocked a high of GBX 258.90 and a low of GBX 211.20 in the last 52-week period. At the current price point, as quoted in the price chart, the company’s shares were 10.89 per cent below the 52-week high price point and 9.23 per cent above the 52-week low price point. The company has a dividend yield of 4 per cent.

The company’s stock beta (180 days) was 0.71, which makes it far less volatile in comparison to the benchmark index. In the past one year, Tesco Plc’s shares have delivered a price return of 1.54 per cent. Also, on a YTD (Year-to-Date) time interval, the stock plunged by approximately 9.81 per cent.

Boohoo Group Plc

Another retailer, Boohoo Group Plc (LON:BOO), rolled out a scheme to incentivise the top management upon meeting certain criteria.

(Source: Company’s filings on London Stock Exchange, Boohoo’s management incentive plan)

If the market capitalisation rises by 66 per cent to £7.55 billion in the next three years from £4.54 billion recorded on 16^th June, the management would be eligible for the full Monty of £150 million, according to the plan. This would translate to a CAGR (compound average growth rate) of 18 per cent in terms of market capitalisation.

In the first quarter of the fiscal year 2021, due to a shift in consumer behaviour in terms of online shopping, the company’s revenues were up by 45 per cent year on year to £367.8 million. The high street fashion retailer expects to deliver another year of strong, profitable growth for the current financial year 2021, in accordance with the management guidance. The company expects an adjusted EBITDA margin of roughly 10 per cent and Revenue growth to be approximately 25% for the fiscal year 2021.

Boohoo Group Plc’s Stock price performance

Daily Chart as on 26th-June-20, after the market close (Source: Thomson Reuters)

As on 26th June 2020, Boohoo Group Plc’s shares last traded at GBX 408.80 per share; lower by 0.29 per cent as compared to the previous day closing price level. The company’s market capitalisation was around £5,161.49 million.

Boohoo Group Plc’s shares have clocked a high of GBX 415.00 and a low of GBX 157.50 in the last 52-week period. At the current price point, as quoted in the price chart, the company’s shares were 1.49 per cent below the 52-week high price point and 159.56 per cent above the 52-week low price point.

The company’s stock beta (180 days) was 2.33, which makes it far more volatile in comparison to the benchmark index. In the past one year, Boohoo Group Plc’s shares have delivered a price return of 93.56 per cent. Also, on a YTD (Year-to-Date) time interval, the surged by approximately 36.68 per cent.