Tesco is one of the worlds leading international retailers. Since the company first the trading name of Tesco, in the mid 1920s, the group has expanded into different formats, different markets and different sectors. The UKs leading retailer Tesco was floated on the stock exchange in 1947 and in 1995 took over rival Sainsburys position as the UK number one. The principal activity of the group is food retailing, with over 2,000 stores worldwide. Tesco has a long term strategy for growth, based on four key parts: growth in the Core UK business, to expand by growing internationally, to be as strong in non-food as in food and to follow customers into new retailing services. The company launched a home shopping service in 2000, allowing customers to order their shopping online. Tesco is now expanding its convenience stores and overseas into areas such as Taiwan, Malaysia, Poland, the US and Ireland.

Upper graph = 12 month share price with 6 month moving average
Lower graph = 12 month volume (red line = volume average).

Sector movers: UK grocers drop as analysts predict weak Q1 from Tesco

Mon, 02 June 2014

Nervousness ahead of Tesco's first-quarter results prompted some profit taking among supermarket stocks on Monday, which were among the worst performers in afternoon trade.

The negative trend of UK like-for-like (LFL) sales at Tesco is likely to have worsened in its first quarter, analysts at Oriel Securities said.

Tesco's shares were down 1.1% at 300.27p today, with J Sainsbury falling 1.9% and WM Morrison down 1.1%.

"Those looking for Tesco’s first quarter to offer a sign of life in UK food retail are likely to be disappointed. -4% LFL is on the cards and if there are no signs that things are picking up, another downgrade is entirely possible," the broker said. This compares with an exit rate in UK LFL sales of -3.5% in the fourth quarter of the previous financial year ending February 2014.

What's more, Oriel said that the estimated 4% UK LFL decline "may be at the optimistic end of the spectrum", according to recent industry data from Kantar.

The broker said that inflation has "ceased to be a factor in UK food retailing" given the recent wave of price cuts across the industry. "That's good news for customers, but bad news for 'Big 4' top lines", it said.

Similarly, analysts at Shore Capital last Thursday said that they "cannot call an end to the downgrade cycle" at Tesco and said they "have never been so gloomy on Tesco UK’s prospects in over 20 years". The broker expects LFL sales to decline by around 3.5% in the first quarter, driven by easing inflation and the negative impact from the group's store modernisation programme.

Shore believes that the company's UK trading strategy "simply just does not seem to be working", given that customers view the retailer as too expensive compared with cheaper rivals such as Asda and even WM Morrison given the latter's recent price cuts.

"That is a dangerous and frankly untenable place for a mass-market leader to be in our view!" it said.



http://sharecast.com/news/sector-movers-uk-grocers-drop-as-analysts-predict-weak-q1-from-tesco/21746807.html

Tesco PLC First Quarter Interim Management Statement

FIRST QUARTER INTERIM MANAGEMENT STATEMENT

· A quarter of significant improvement for customers, with a greater focus on building long-term loyalty, through:
o Significant price cuts on the lines that matter most
o Enhanced rewards through Clubcard Fuel Save
o Cheaper online grocery services
o Over 100 more stores refreshed
· UK LFL inc. VAT (exc. petrol) of (3.7)% - in line with last year's exit rate despite the significant reduction in untargeted promotions and deflationary impact of investment in lower prices
· Group sales growth of (0.9)% (at constant rates, exc. petrol)

Tesco boss Clarke living on borrowed time

By Jamie Nimmo

June 04 2014, 1:25pm
Tesco boss Clarke living on borrowed time

Tesco’s (LON:TSCO) under-fire chief executive Philip Clarke would have investors believe the 3.7% like-for-like sales fall is all part of the masterplan.

“Our accelerated plans are making a real difference for customers and we are more competitive than we have been for many years,” Clarke insisted.

His claims follow the worst sales performance from Britain’s biggest supermarket group in two decades.

Whether investors believe the turnaround really is on track remains to be seen, but despite Tesco dropping a big hint about the likely sales figures, the shares still took a 1% tumble to 294p.

Broker Cantor Fitzgerald is sceptical of the progress being made and thinks the market needs clearer signs of a recovery before betting big on Tesco.

“Investors should be questioning management’s strategy and why the prior year’s UK investment has led to falling sales,” said Cantor analyst Mike Dennis.

“Tesco’s shares, in our view, hold limited attractions until it can start to turn around its large legacy superstore operations that are in structural decline.”

More than 100 of those large superstores – what Tesco calls its ‘Extra’ stores – are currently being revamped to this end.

The refurbishment is part of the plan to counter the drive from the up-and-coming discounters, such as Aldi and Lidl, as well as its traditional rivals Asda and Sainsbury’s.

In the face of this intense competition, the retailer has entered into a price with its rivals cutting the costs on a host of the most important components of the weekly shop.

It is also making enhancements to its popular Clubcard scheme, pledging a cheaper online service.

Clarke says the plans were always expected to hit sales in the near-term.

But whether the strategy tweak was expected to hit sales so hard remains a bone of contention.

Either way, it buys Clarke some time to turn the sinking ship around. Undecided investors are likely to stick with the stock for signs of a change in fortunes, but many might follow Cantor Fitzgerald’s advice and sell the shares.

The proof of the pudding for Clarke is in the eating. He is living on borrowed time and another set of dismal numbers could spell an end to his rein at Tesco.

end to his rein?
perhaps the shareholders will come to end of their tether too :-)

:-)

You have to ask what are the board of directors being paid for. Leahy expanded foreign operations at break neck speed and to date at massive cost ie loss. Also cutting all operations to the bone. Then he jumps ship before the shi- hits the fan. Clarke has not got a clue. Are the second set of results going to be worse from Tesco, with a flow of new build stores coming on stream from Aldi?

is there any good reason to be long of these?

The yield (as long as its maintained) is now @5%

Too rapid expansion into the unknown (USA) has been the downfall IMHO.

You see it so often with so called growth companies that can no longer expand at home.

Eye off the ball.

Grocery business is a crowded trade now. Just too much of it fighting over the same pound coin.

How much expansion can Aldi and Lidl do into UK. Not sure if they are going to get burnt also very soon.

Aldi and Lidl not carrying the overheads of the super stores . ie rent, rates and wages.


Aldi stores (UK) - 500 at the end of 2013, with 50 new stores for 2014.

i've only ever been into one aldi store (or was it lidl) and that was in france ..... i thought it very spartan and about the only thing i would have wanted to buy was water, or i suppose some non-consumable basics

i don't think i've ever been in a tesco
waitrose and m&s are good but o'priced
sbry is ok, but again, very little in the food line i'ld buy, though the quality and selection of vegetables at our local branch is outstanding, and generally knocks the socks off waitrose and even m&s .... i'ld never buy meat or bread there or even chicken

Nor me, but just driven though Bishops Stortford and they are queuing for the carpark.

And its not hard up families shopping there.

CEO says can't promise when sales will improve

that's a pretty damning statement

I recently drove to an Aldi, just to see what the English version is like.

It was smaller than the ones I've seen in France, but absolutely full of people.

That was on a Saturday, so I went back on the Sunday to make a comparison and couldn't get in the car park.

The plus side for Tesco & the like, is that Aldi/Lidl will have to invest a pile to get a decent increase in floor space.

When's his share options due ? :-))

I was reading this week that now the average shopper makes several shops a week, which saves on waste and shops at several stores. So the large superstores are coming under more pressure. Theres a new Aldi being built in Harlow. There strategy does not seem to want huge stores or white elephants.

Why does ALDI/LIDL not rent some of Tesco's floor space. lol

Losing sales is one issue. When margins get squeezed then your problems really start multiplying.