Tesco decides to keep Dunnhumby after strategic review of business

Tesco has announced during its half-year results that it will no longer be selling its data analytics arm Dunnhumby.

The supermarket reported that after it had finished reshaping, it had decided to retain Dunnhumby following a “comprehensive strategic review”.

Tesco first revealed plans to sell the unit behind its Tesco Clubcard loyalty cards in February 2015, after it sold its Tesco Broadband and Blinkbox video streaming service to TalkTalk, despite previously claiming it would use the analytics firm to launch a digital wallet.

The retailer reported a drop of £425m in year-on-year operating profit, claiming it would focus on “generating cash from retained assets”, such as Dunnhumby, to level its balance sheet.

Tesco stated the “restructuring of Dunnhumby’s US relationship with The Kroger Company” had contributed to its fall in profit. Some have blamed these changes for a reduction in offers for the analytics firm, which have reportedly dropped far below the expected £2bn to as low as £700m.

In April 2014, Tesco used Dunnhumby to acquire Berlin-based digital advertising firm Sociomantic Labs for £124m, giving the firm access to Sociomantic’s customer base in 14 countries worldwide.

“Our transformation programme in Europe has accelerated growth and reduced operating expenses, while in Asia we have gained market share in challenging economic conditions,” said Dave Lewis, Tesco’s chief executive.

“We have concluded our portfolio review with the sale of Homeplus – our business in South Korea – enabling us to take a significant step forward on our priority of strengthening the balance sheet. Further progress will be driven by continuing to increase the level of cash generated from our retained assets.”

The supermarket claimed one of its priorities for regaining competitiveness for its core UK business was to improve systems and stock management to “underpin three days’ stock reduction year-on-year.”

However, in 2014 Tesco claimed it would reduce its IT spend to save money when the firm was forced to drop its yearly profit forecast from £2.8bn to £2.4bn.

This announcement came after the supermarket blamed its shift into the omnichannel space for its drop in profits in 2014, despite online sales growing.