Tesco: ‘Don’t hike prices’

Britain’s biggest retailer Tesco has warned its multinational suppliers against pushing up prices after a drop in the pound so they can maintain their reported profits.

In his first public comments since last month’s ‘Marmitegate’ row in the UK between Unilever and Tesco over who should take the hit from the weaker pound, the supermarket’s chief executive Dave Lewis said that when there is a currency devaluation, multinational businesses present results in both constant and current exchange rates.

“And the City (financial investors) completely understands it, they don’t devalue a stock because of that, they understand it’s part of the volatility of being in many countries,” Mr Lewis said.

“The only thing we would ask of companies that are in that position is they don’t ask UK customers to pay inflated prices in order that their reporting currency is maintained. They don’t do that for countries outside of the UK,” he said.

Sterling has fallen around 16% against the dollar since the UK voted on June 23 to leave the EU, making imports more expensive. It is also down to a lesser extent against the euro.

Tesco scored a public relations coup in October when it briefly halted online sales of goods produced by Unilever after the Anglo-Dutch group sought to lift prices of popular brands such as Marmite. The two quickly reached an agreement, the terms of which have not been disclosed.

Last week, Mike Coupe, chief executive of Sainsbury’s, Britain’s No 2 supermarket group, said multinational suppliers should take some of the pain of sterling’s fall, arguing their profitability was higher than UK grocers’.

Mr Lewis, who worked for Unilever for 28 years, said he recognised some suppliers were facing legitimate cost pressures.

Shares in Tesco have risen 43% this year after three straight quarters of underlying UK sales growth and a rise in market share after five years of losses. Industry data published this week showed Tesco’s sales rising at the fastest pace for three years.