Controversy Surrounds Tesco’s Dividend Payout Amidst Pandemic Profits

  • Tesco defends £635m dividend payout to shareholders despite receiving a £585m tax break
  • Chairman John Allan says paying shareholders is the ‘right thing to do’
  • CEO Dave Lewis: ‘2019 turnaround complete and financial performance allows us to pay out to those who supported us’
  • Labour peer Andrew Adonis calls for CEO resignation and legislation against using state bailout funds for dividends
  • Sales increased 30% during coronavirus crisis due to panic buying, now stabilized
  • Tesco increases Grocery Home Shopping capacity by over 20%

Tesco, a member of the ‘Big Four’ grocers, has defended its £635 million dividend payout to shareholders despite receiving a £585 million tax break. The company’s board approved a final dividend of 6.50p, bringing the full-year dividend to 9.15p. Tesco chairman John Allan stated that paying its shareholders was the ‘right thing to do’ after they supported the grocer through a five-year accounting scandal. CEO Dave Lewis added that the company’s financial performance in 2019 allowed them to pay out to those who backed them during the challenging period, when dividends were either not paid or significantly reduced. However, Labour peer Andrew Adonis criticized the decision and called for CEO Dave Lewis to resign, arguing that using a £600 million state bailout to pay dividends was a ‘fundamental error of judgement and leadership.’ Adonis also suggested making it illegal for companies to pay bonuses and dividends from state bailouts and clawing back funds from those who have done so. Tesco’s sales surged 30% during the coronavirus crisis due to panic buying, but have now stabilized. The company has increased its Grocery Home Shopping capacity by over 20%.

Factuality Level: 8
Factuality Justification: The article provides accurate information about Tesco’s dividend payout, its sales increase during the pandemic, and its plans for Grocery Home Shopping. It also includes opposing viewpoints from both Tesco representatives and critics like Andrew Adonis. However, it could be improved by providing more context on the accounting scandal mentioned.
Noise Level: 3
Noise Justification: The article provides relevant information about Tesco’s dividend payout and its sales performance during the pandemic but includes some irrelevant details like the mention of an unrelated tweet from Andrew Adonis.
Financial Relevance: Yes
Financial Markets Impacted: Tesco’s dividend payout and its impact on shareholders
Financial Rating Justification: The article discusses Tesco’s dividend payout to shareholders, which is related to financial topics such as company profits and shareholder returns. It also mentions the controversy around using a tax break and the impact of the coronavirus crisis on the company’s sales and operations.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the text. The article discusses Tesco’s dividend payout and its sales increase during the coronavirus crisis, but it doesn’t mention any major impact or consequences.

Reported publicly: www.retailsector.co.uk