Investors will – or should – be aware of the old mantra that the past is not necessarily a guide to the future. While that is true, it is also important to note that the past is the best guide we have to the future. Unless something has changed dramatically, what has happened over the past year is likely to be roughly repeated over the next one.
So I was a little disappointed to read an interview in the Daily Telegraph this week with 
Tesco (TSCO) chief executive Philip Clarke in which he was quoted as saying: ‘My job is never to look back and work on what we should have done. My job is to look forward and decide what it is we should do.’
This is only half right. The second sentence is fair enough but Tesco most certainly does need to look back at the many things that went wrong. Indeed, for all his quotable quote, Clarke is doing just that, much to his credit. Sainsbury (SBRY), in its long decline, singularly failed to tackle the legacy of mistakes that allowed Tesco to sneak on front then race away.
I am told by a former Sainsbury employee that when Justin King was appointed chief executive there 10 years ago he talked to everyone throughout the company – and he listened. That was how he learnt what had gone wrong and how he could put matters right, which he did rather spectacularly.
I still feel that Clarke has a lot of work to do unravelling the past. He has already ditched the American nightmare but talking of reducing the price of carrots and cucumbers is not the answer. It gives the impression, probably correctly, that Tesco now reacts to the upstart budget chains rather than setting the retail agenda as it used to do.
Once a retailer is in decline it is likely to slide for a long time, as Sainsbury did, and to take a near genius to turn it round. I cannot feel that Clarke is in Justin King’s league.
Retail Sales Jumped in February
Never accept weather as an excuse when a retailer does badly. Retail sales jumped in February according to the Confederation of British Industry. As any shopper (or shopper’s spouse) knows, when you want to shop you turn out come hell or high water.
Retailers told the CBI that they were increasingly optimistic and were stepping up investment. So when the next set of retail results comes out, the winners and losers have their fates in their own hands.
Rodney Hobson is a long-term investor commenting on his own portfolio; his comments are for informational purposes only and should not be construed as investment advice.
