In a recent Retail Week opinion piece the columnist John Richards mused about the cost of all the adventures Sainsbury have had over the years and whether the cost outweighed the benefits and whether the management time and effort could have been more profitability spent focusing on the core of the company.  He described their approach as Sainsbury’s “death wish” and cited SavaCentre, Homebase, Shaw’s, Netto and now Argos as illustrations. That may be a tad strong, but you perhaps get where he is coming from.

Further, as a game of ‘what if’ it is entertaining, if ultimately futile. Unless, that is you are proposing a merger and two (at least) of your institutional shareholders have openly come out against it.  Yes, we are back on the topic of Tesco.

Now the question of wasted management time and effort is not one that is unknown to Tesco.  Recent years have resembled a speeded up version of the ‘hokey-cokey’ (look it up) as countries were hastily entered, only to be withdrawn from.  The USA, Japan, China etc. are recent examples, but Ireland first time round was a standout in the 1980s, and there was also France. And now they want to merge with Booker.

I always assumed the current proposed Booker deal would run into Competition Authority problems – the sheer defensiveness on the day of the announcement made me feel they were shooting first and asking the questions later.  But maybe I was wrong that this was the largest hurdle? There seems to me to be a certain commercial logic to the strategic move – the sectors Booker are in have been growing ahead of the core retail market, but then that is never the sole consideration in these things.

The recent announcement by Schroders and Artisan Partners (Tesco’s third and fourth largest shareholders) that they are agin in the deal on the grounds that it is “foolhardy”, “an unwanted distraction” and “value destructive”, let alone the price being paid, is both public and eye-catching. It may come to nothing, and Tesco are defiant at time of writing, but it is hardly a vote of confidence from c9% of your shareholders at a time when you need friends.  Especially given you’ve just done a costly deal with the Serious Fraud Office in relation to false accounting claims, which may not be the end of the matter either.  Focus, even though this is a new team and progress has been made, should be the order of the day.  Is it?

Well, the figures published this morning, show both faces of Tesco. The headline profit figure is reduced from previous years. But, the underlying operational figures are much stronger than last year and indeed show the first annual UK LFL growth since 2009-10. That is something to be satisfied with, but it is the exceptional items that have caused the disparity between underlying and total performance. The settlement with the Serious Fraud Office and the Financial Conduct Authority is only one of a number of provisions and exceptions. And some analysts are questioning the cost of the pension deficit which has doubled and could be storing up issues for next year and beyond. Past behaviour is meeting current and future performance.

In terms of the core operating business the team does have a lot to be pleased about, though they recognize that the job is nowhere near completed. And that is why the Booker question is not going to go away. Is it part of the solution or likely to be part of the problem?

Last week, Poundland announced that 99p Stores were to be put into administration.  Who knew they still existed?  Operated is the wrong word as it seems this was a vehicle for closed stores, some 60 of them.  This, only two years after taking them over.  Whilst a lot of stores were converted, this rump was left as very unprofitable.  Changes in Poundland have pointed to the pressures this end of the market is coming under.  It is also a pointer to the sometimes difficult process of making mergers work.  Distraction is just one part of it. The grass is not always as green as it looks.