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Tesco Direct to shut down as Wilson swings axe
Tesco is shuttering its online general merchandise business, Tesco Direct, in new UK chief executive Charles Wilson's first visible act since joining as part of the Booker takeover.
Wilson said the move was "an essential step towards establishing a more sustainable non-food offer" and part of the group's aim to offer customers the ability to buy groceries and non-food products from one website.
Tesco began selling toys, home and cookware on the main tesco.com site.
"There is no route to profitability for this small, lossmaking part of the business," the company said in a statement, explaining that non-food orders will instead be fulfilled from stores.
From 9 July the Fenny Lock fulfilment centre in Milton Keynes will close, with around 500 workers facing redundancy.
Tesco on Monday made three changes to its senior management team, with Tony Hoggett returning from Tesco Asia to help run the core chain's stores in a new role as group chief operating officer.
Alison Horner, previously the group's chief people officer, will take over the Asia brief, with her role taken by Natasha Adams, a former store manager who was recently people director for UK and Ireland.
"The Tesco Direct business has been a running sore for the company, sustaining annual losses since its development back in 2006," said analyst Clive Black of Shore Capital, adding that the eradication of the losses of Tesco Direct helps reinforce group forecasts.
"This is a clear signal that the company is taking decisive action and is the first demonstrable statement by Charles Wilson since he joined the group in early March as CEO of the UK and Republic of Ireland."