Tesco to confirm sale of Blinkbox this week, predict analysts
Ailing retailer Tesco could this week announce the sale of its streaming service Blinkbox, as well as other assets, in an effort to cut costs following a disappointing Christmas period, according to analysts.
The Telegraph reports that analysts from Deutsche Bank have predicted the trading update from Tesco, scheduled for Thursday, will report a five per cent drop in like-for-like sales for the three months to the end of November and a 4.3 per cent fall for the period since then, including Christmas.
Chief executive Dave Lewis is also likely to outline cost-cutting measures, including the sale of major assets.
Clive Black, analyst at Shore Capital, said the retailer will unveil a “focus on simplification”.
“I would be surprised if there is not a cut in capital expenditure. I don’t see how you can justify spending £2.1bn a year,” he added.
Speculation has been rife for months that Blinkbox would be sold, with Vodafone understood to be one interested buyer, as the supermarket tries to recover from the £263m profits overstatement which came to light last year.
To plug the gap, Lewis and finance director, Alan Stewart, have also reportedly considered selling a stake in Tesco Bank as well as axing some or all of Dunnhumby, the analysis tool behind ClubCard.
A spokesperson at Blinkbox declined to comment or confirm that its future would be addressed this week.
Tesco acquired the streaming service back in 2011, under Sir Terry Leahy’s management, with the aim of taking on Netflix, Lovefilm and BskyB’s Now TV streaming service.
However, in October last year The Times reported that Lewis had met with senior management at Blinkbox to inform them of the impending sale.
Despite the mounting uncertainty, Blinkbox has continued to try and attract new audiences and in the same month as the management meeting it launched a major multi-platform branding campaign.
Speaking to The Drum at the time, Blinkbox Movies & TV managing director Adrian Letts maintained that the service was “go go go” with a number of product developments in the pipeline.