Nearly 50,000 Tesco staff will be celebrating today with a multi-million pound payout as two of its Save As You Earn share schemes mature.
With the Tesco share price now well over #4, over 6,000 top savers, including checkout assistants, dot.com delivery drivers and managers, stand to net more than #7,000, a 120 per cent return on investment – substantially higher than the low interest rates currently offered on savings accounts. Others will pick up lower amounts.
While many staff choose to splash their cash on luxury holidays, or home improvements, some are keeping their finances under control and paying off the mortgage early. Up to 61 per cent opt to keep their shares, with many saving for their retirement or for their family’s future.
Tesco chief executive Sir Terry Leahy said: "Our staff are the main reason so many people choose to shop with Tesco and through Save As You Earn, they can share in the success that they achieve through all their hard work. Share schemes are an important part of our benefits package and I’m delighted that so many people have chosen to invest and reaped the rewards they deserve."
Under the SAYE scheme, Tesco staff can set aside a fixed sum, between #5 and #50, from their salary every month for a three or five-year period. When the scheme matures they have the option to buy Tesco shares at a price set when they joined the scheme.
Employees who joined the scheme five years ago can buy shares at the 2001 option price of #1.98 each, while those who opted in three years ago can do so at the 2003 price of #1.95. Staff are then free to sell their shares at a profit or keep them as a long-term investment.
The payouts comes as Tesco continues to face stiff competition from its closest rivals who increased their market share over the festive and New Year period.
Wal-Mart owned Asda and Sainsbury both kicked off the New Year in style, according to data from research group TNS Worldpanel.
Asda sealed its position in second place with a market share of 16.8 per cent, up from 16.6 per cent the previous year and ahead of figures for December 2006, when it was also 16.6 per cent.
The gap between Asda and Sainsbury in third place widened after a encouraging market share surge from Sainsbury at the end of last year, which saw just two percentage points between them.
Sainsbury’s market share is now three percentage points below Asda despite a rise from 16.4 per cent to 16.5 per cent in the latest figures.
Tesco, meanwhile, maintained its lead with a 31.5 per cent market share, up eight per cent on the previous year.
Morrisons remained stable in fourth position on the grocery ranking, with 11 per cent, slightly down on the 11.1 per cent it held the year before.
Supermarkets across the board enjoyed a bumper start to 2007, with sales up five per cent to #20.2 billion in the 12 weeks to January 28 compared to the previous year.
The strong figures from TNS come just days after the British Retail Consortium released its January statistics, which showed a like-for-like sales increase of 3.1 per cent on 2006, largely driven by the grocery sector.
Meanwhile Tesco will initially target the greater Phoenix area for its US grocery stores, to be called Fresh & Easy Neighborhood Market.
In its much anticipated foray due to start later this year, Tesco said it had secured 20 sites in and around Phoenix and was researching additional locations.
Other stores would open in Las Vegas, Los Angeles and San Diego and more than 2,500 jobs will be created.
"Our company has enjoyed strong success in countries throughout Europe and Asia and we are excited to bring that success to America," Fresh & Easy Neighborhood Market chief executive Tim Mason said.
The world's fifth largest retailer will go head-to-head with convenience stores such as 7-Eleven in the world's most competitive consumer market, dominated by world leader Wal-Mart.
What they're splashing out on
Penelope Stanford, aged 48, a fresh foods team leader in Smethwick, will have worked for 30 years for the group in April, and besides looking forward to her party, she’s also cashing in #2,700 in shares.
She has been saving #50 a month on a five-year scheme, seeing her shares rise in value each year, and so has decided to celebrate her 28th wedding anniversary in style.
She is whisking her husband, an LGV driver, away for 11 days in India followed by two days hard shopping in Dubai.
Some of the cash will feed her designer clothes habit, and she adds: "I’m also paying for my husband to take his ADR test, which means he’ll be able to drive tankers and so develop his career – I think he’s worth the money!"
Karen Westmoreland, aged 31, is a service team leader who has been with Tesco for five years.
She is looking forward to spending her #1,500 payout on home improvements on her living room and bathroom in her house in Smethwick.
"I have lived there for 11 years and I’m always DIY-ing as I get bored easily! My husband gets very annoyed – he does most of the work on a room and then I want to change it immediately."
Now she wants a striking new red and white bathroom.
Robert Burns, aged 34, is a backdoor manager, who after looking out for Tesco’s deliveries in Edgbaston, is expecting a delivery of his own of over #2,000.
He has been saving on a five-year scheme, and says the money will go on his bachelor lifestyle and his bachelor pad.
He also plans to treat his two dogs – also confirmed bachelors.