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).

doodlebug :-)) This reminds me similar to the likes of Thomas Cook and Tui. There's TC cutting costs to the bone, while Tui was/is expanding with new purchases and new aircraft. Of course,short term the market likes/rewards the share price, but long term who is going to have the niche/strongest brand ? Does not need answering. Today Tesco announces the building programme is on hold and the disposal of 40 odd stores and Aldi cannot build fast enough, as soon as planning permission is granted.
Look at the great lengths the major supermarkets are having to go to get anywhere
near in price comparison and at the end of the day the prices you see above for the likes of Aldi are everyday (365) prices and not discounted. How long can the majors keep up the discounts ? What is going to happen when 550 new Aldi stores come online in the next 8 years ? The supermarkets that are trading strong today may just face footfall pressure .

Tesco spells out revival plan
By Harriet Mann | Thu, 8th January 2015 - 11:53


Finally, the cycle of bad news has been broken. Of course, the challenges facing Tesco (TSCO) are by no means over, but it's a relief to hear some good news at last from the struggling supermarket and to see the smoke around its revival plans begin to disappear. Blighted by an accounting scandal and profit warnings in the first two months of his employment, chief executive Dave Lewis will be pleased to see the share price heading north again.
Christmas hardly dazzled, but at least UK like-for-like sales fell just 0.3% over the six weeks, much better than the -3.5% expected in the City. UK sales for the entire third quarter also improved on the previous period at -4.2%. That took sales for the 19 weeks to 3 January to -2.9% and group like-for-like sales down 2.7%. The international performance was mixed.

Tesco still expects to generate the already lowered profit guidance of £1.4 billion, and, as expected, it has confirmed there will not be a final dividend this year.




Lewis took the opportunity to outline some of his plans to turn the ailing supermarket around, which include the appointment of Halford's (HFD) CEO Matt Davies as head of Tesco's UK and Ireland business. Davies, who has overseen the recovery in the bicycle and car parts retailer's share price by 127%, will join the company in June.

In a £250 million cost-cutting drive, Lewis will also shut 43 unprofitable stores, consolidate its head office in Welwyn Garden City and see significant changes to its store building programme as it slashes its capex budget. It will also try to offload Tesco Broadband and BlinkBox to TalkTalk and is exploring the options for its dunnhumby business.

Changes will be made to employees earnings and benefits, with a pay freeze and closure of the company defined benefit pension scheme to all staff. A new flexible benefits package and turnaround bonus will be introduced.

Lewis has admitted there is much more to do and although there are plans in the pipeline he has kept his cards close to his chest. Fears of a rights issue were not dismissed, just not mentioned, but Bernstein analyst Bruno Monteyne thinks it's unlikely.

"Tesco for too long failed to adapt to the changes in the UK competitive landscape (more local competition and better execution by discounters). It made matters worse by losing its value credentials and now charging 6% more than Asda. After several profit warnings, a new CEO and an accounting scandal, Tesco's troubles are now well known. Things now seem so bad that consensus implies a rights issue is around the corner ...[but] we think a rights issue is rather unlikely."

Although the £250 million cost cutting benefits will be reinvested, Barclays sees stronger sales and improving margins having an impact on profits, giving a boost to guidance. It has upgraded forecasts slightly and now reckons the supermarket will make a trading profit of £1.48 billion in the year to February 2016, rising to £1.73 billion the year after.

They key message to take from the update is simplification, says Monteyne, believing there will be less of the "smoke and mirrors of the past". A rerating of the stock looks pinned on improving sales.

"In terms of likelihood of any form of turnaround, it isn't rocket science: cut prices to close to Asda and fund it all and more by radical cost cutting. Tesco used to be great at this and even if it only succeeds at half the things it tries, it will do better than the current consensus doomsday scenario. We rate Tesco 'outperform' with a target price of £2.35."

After losing over half of its value over the last year, Tesco's share price rose by nearly 10% to just under 200p on Thursday. The shares now trade on an eye-watering 22 times earnings forecasts for 2016, a premium to all European peers except online operator Ocado (OCDO). The valuation for the year after is only slightly more palatable. UK sales will have to grow to justify anything like this rating. That, however, will take time.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

obvious blue today - city always likes redundancies and closing of pension funds ;

...Junk status to boot.

Aye good day trade though :0)

Out (for now) @ 207.54 + 15.82

Went to Aldi Xmas eve expecting it to be heaving , but it wasn't . Lots of turkeys unsold . Went again after their 2 days off turkey area cleared completely , so they were lost out of date . went last night a special buy day but very quiet , lots of Xmas stuff unsold , and place full of old special buy stuff . It did look well shopped , maybe they got Xmas wrong.

Jefferies International Hold 204.70 - 195.00 Reiterates

Barclays Capital Equal weight 204.70 205.00 205.00 Reiterates

Kepler Cheuvreux Hold 204.70 - 156.00 Reiterates

Beaufort Securities Hold 204.70 - - Retains

Deutsche Bank Hold 204.70 180.00 180.00 Reiterates

Moody's downgrades Tesco debt to 'junk'

Well! so much for the doomsters eh? (Moodys - spit!). Good to see buy low sell high still alive. :0)

That little speech above was a rant to myself for being led by the crowd and bailing out too early.

Tesco out, Aldi in – discount retailer reveals plans for Walton next to Tesco’s abandoned site


http://www.eadt.co.uk/business/tesco_out_aldi_in_discount_retailer_reveals_plans_for_walton_next_to_tesco_s_abandoned_site_1_3920177

Tesco out, Aldi in – discount retailer reveals plans for Walton next to Tesco’s abandoned site


http://www.eadt.co.uk/business/tesco_out_aldi_in_discount_retailer_reveals_plans_for_walton_next_to_tesco_s_abandoned_site_1_3920177

UK supermarkets braced for battle as Tesco comes out fighting


Sun Jan 18, 2015 9:00am GMT



WM Morrison Supermarkets PLC

MRW.L

192.70p

+4.60+2.45%

01/16/2015




J Sainsbury PLC

SBRY.L

256.80p

+1.50+0.59%

01/16/2015




Tesco PLC

TSCO.L

219.05p

-0.20-0.09%

01/16/2015






* Tesco still clear leader at home with share of about 30 pct

* CEO Lewis has strategy to narrow gap with discounters

* Pre-Christmas price cuts followed by January reductions

* UK underlying sales down just 0.5 percent in Christmas period

By Neil Maidment and James Davey

LONDON, Jan 18 (Reuters) - Four months into the job, Tesco boss Dave Lewis has wasted no time imposing a range of price cuts and customer service improvements designed to regain the initiative in a tough market. There are already signs customers are noticing.

Despite the series of shocks Tesco suffered in the past year, famously prompting billionaire investor Warren Buffett to admit buying into the stock was a huge mistake, it remains clear leader in its home market, lending it the clout to squeeze its "big four" rivals as well as upstart discounters Aldi and Lidl.

Given the success of those two brands, price is a key part of Lewis's revival strategy.

"Lewis will find a way to knock the life out of those discounters and it may feel like carnage for the next two years, but Tesco has too many powerful tools in its tool kit not to come out fighting," said an ex-Tesco UK director, who declined to be named.

While Tesco probably won't beat discounters on a full basket of goods, it can narrow the gap and match some items, and become more competitive.

Lewis will hope shoppers will be prepared to spend a little more overall so they can benefit from Tesco's bigger ranges, superior service and online options not found at the discounters.

Tesco has already followed pre-Christmas price cuts on staples like vegetables with January reductions averaging 25 percent on 380 branded products.

The price of a pack of 80 Tetley teabags for example was cut to 1.99 pounds from 2.29 pounds, working out at 2.49p per bag. Aldi charges 2.25 pounds for a bag of 120 Tetley teabags, equating to 1.88p per bag.

Other cuts were more competitive. The price of a 750 gram pack of Kellogg's cornflakes was cut to 1.98 pounds from 2.48 pounds, equating to 26.4p per 100 grams, slightly undercutting Aldi which charges 2.65 pounds for a 1 kg pack, or 26.5p per 100g.


OMINOUS SIGN

While all of the big players' sales declines were less than some expected over Christmas, it was Tesco's steadier showing that caught investors' eyes and delivered an ominous sign for rivals as it bids to recover from four profit warnings and an accounting scandal.

Having dropped 4.4 percent in the previous three months, its UK underlying sales fell just 0.5 percent in the Christmas period, helping its shares make their biggest one-day gain since 1988 after sliding by almost 50 percent in 2014.

Lewis's move to complement price cuts with more shop floor staff, which meant better-stocked shelves, shorter queuing times at the tills and tidier stores, helped deliver the better performance.

Tesco's fresh food volumes were positive over Christmas for the first time in five years, while industry data showed it outperformed the market in all product areas on a volume basis.

Cost savings, including head office job cuts and store closures, will help fund Lewis' plans. More complex work such as a further pruning of Tesco's sprawling product categories is also on his agenda.

"We gleaned a small insight into a massive programme of work that can make Tesco sell more at a lower cost from a leaner supply chain," analyst Clive Black at brokerage Shore Capital said.


SEISMIC SHIFTS

For its rivals, Tesco's more aggressive stance is increasing the pressure in an already tough market.

Britain's big four grocers, including Sainsbury, Wal-Mart's Asda and Morrison as well as Tesco, have been hit by seismic shifts in recent years.

The German discounters have raced to a combined market share of about 8.3 percent, sparking the big four to spend billions lowering the prices of staple items.

But with anaemic overall growth in a 175 billion pound ($267 billion) market, someone must lose. And for all its recent disasters, Tesco is still by far the biggest player with a market share of around 30 percent, a position perhaps recognised by a stock market rating of 20 times forecast earnings, a 39 percent premium to its UK sector, according to Reuters data.

Sainsbury by contrast trades on just 12 times.

"It's a zero-sum game ... Numbers two, three and four are going to be hit with any Tesco resurgence," Fraser McKevitt at market researcher Kantar Worldpanel said of the big four, which hold a combined 75 percent of the UK market.

Even stellar growth at Aldi and Lidl, whose no-frills ranges have chimed with shoppers, may slow as their appeal is reduced by tumbling prices elsewhere.

Yet Lewis's strategy is not just about price.

In Tesco's toilet paper aisles, products and lines have nearly halved to increase space for top sellers. A subsequent mix of savings on storage, staff hours spent re-stocking shelves and simpler supplier deals have led to an 11 percent price cut for customers. Volumes sold have since jumped.

Price cuts on own-brand products are expected to follow, with savings in IT and logistics and 100 million pounds from a wage freeze. Small loss-making stores are being shut and expansion is slowing.

Tesco has even switched ad agencies to help rebuild its brand, though it has not yet said if it will ditch its dated red-and-blue logo and its "Every Little Helps" slogan used since 1992.

Lewis acknowledges he still has his work cut out.

"The period to Christmas was an encouraging first step," he said. "But nobody is under any illusion that we've got much much more that we need to do."

($1 = 0.6561 pounds) (Additional reporting by Kate Holton; Editing by David Clarke and David Holmes)

Tesco tools up for price cuts war

http://www.ibtimes.co.uk/tesco-tools-price-cuts-war-1484016

Morgan Stanley hikes price target on Tesco, shares snap higher

Mon, 19 January 2015


Morgan Stanley hikes price target on Tesco, shares snap higher



Tesco Quote more






Price: 223.40

Chg: 4.35

Chg %: 1.99%

Date: 09:59



FTSE 100 Quote


Price: 6,558.16 Chg: 7.89 Chg %: 0.12% Date: 10:00

Supermarket operator Tesco has scope to materially improve its UK operations.
Together with moves to optimise its portfolio that should drive the shares to outperform over the next 12 months, Morgan Stanley analyst Edouard Aubin told investors on Monday morning.

With the company's operating margins in terms of earnings before interest and taxes set to return to 3.5% by fiscal year 2019 Aubin decided to hike his price target on the company's shares to 260p from 155p.

Under a bull-case scenario the price target would rise to 330p he added.

The broker's recommendation on the stock was upped to overweight from equalweight.

As of 09:06 shares of Tesco were pacing gains on the top flight index, advancing by 2.88% to reach 225p.

If momentum continues 245p realistic target.

We can but hope - Why Tesco is worth 330p

And there's me getting ready to short, this ship doesn't have a decent captain let alone crew to sail the waters its got itself into....