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).

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....

Leahy, a man who knows about timing... wonder what he's buying next.

did you notice ....
But the retailer would still have to return UK retail margins to 3.5% by 2019 and 4% long-term. Tesco has pencilled in just 1.1% for 2015

why buy?

Sir Terry Leahy – Chairman of B&M



Sir Terry joined the Board as Chairman in December 2012. Sir Terry is a senior adviser to CD&R. He is also currently a Director of Blackcircles.com. Previously Sir Terry worked at Tesco for 32 years during which he served in a number of senior positions, including Chief Executive Officer from 1997 to 2011.

Still going to be a bumpy ride to get Tesco on the right tracks and its still not known if it can be achieved. Selling the bricks and mortar as to say, will only line the bank balance for a time. Cash burn in a full price war is going to be huge and unsustainable for all time. Tesco must be counting on every day price reductions to hit the discounters early on in the promotion, to win back foot fall at a accelerating rate. The huge amount of openings of discounters in the next few years are going to put these stores on more doorsteps of the public to try. Tesco has almost got to turn shoppers away from them in droves. If this does not happen there is going to be troubles ahead. As said before Tesco cannot run on the overheads of the discounters. A big gamble going on here. Also all those hidden assets etc left off the balance sheet have not been addressed. It must be like a huge game of chess ie moving one piece watching all your other pieces and of course watching the oppositions moves and reactions to your moves. If Dave can pull this off he will be a sought after executive.

My view 50/50 if the management can turn Tesco around. Clearly the likes of Aldi are not going to sit and watch as like Tesco sadly did to them. Tesco are out to rip the heart out of Aldi and the likes very early on and no Doubt the same from Aldi. If Tesco cannot achieve growing numbers back through the doors to support the price reductions then without saying they have unanswerable problems.

I think MR Leahy has a guilty conscience , blaming everyone except himself. I hope like in the past Lord MacLaurin slams Leahy. Sadly Ian Maclaurin appointed Leahy to the chief position who then appointed Clarke.



Ex Tesco-chief Sir Terry Leahy: supermarket suffered "failure of leadership" under Philip Clarke


by Jessica Morris

19 January 2015 6:34pm


http://www.cityam.com/207421/sir-terry-leahy-tesco-suffered-failure-leadership-under-clarke

Did not think for a minute that Clarke would stand for that . Good man.


PUBLISHED: January 19, 2015 5:30 pm
Ex-bosses swap blows over Tesco

Former Tesco bosses Sir Terry Leahy and Philip Clarke have traded blows over who was to blame for the problems at the business which were to foreshadow its alarming decline in fortunes.



http://www.expressandstar.com/business/city-news/2015/01/19/ex-bosses-swap-blows-over-tesco/

Tesco: Where it went wrongTesco


Tonight on Panorama we're revealing the main findings of our investigation into Tesco. Of course, it's not possible to flesh out all of the detail in the programme itself, so I've put together the main findings here.

Here's a reminder of the key things we have discovered



http://www.bbc.co.uk/news/business-30886632

The Guardian, Monday 19 January 2015 21.17 GMT

Given the collapse in profitability in the wake of Leahy’s departure, his own legacy has come under scrutiny. He was previously celebrated for turning Tesco into a global retail giant, but problems at home – where it is now closing and abandoning stores – as well as the decision to pull the plug on US venture Fresh & Easy, has led to a re-evaluation.

At the first sign of trouble, Clarke famously accused the Leahy regime of running the important UK business “too hot” – a phrase that described the process of shoring up profits during recession by making cost savings and starving stores of investment. But Leahy bats the suggestion aside in a Panorama documentary broadcast on Monday night, arguing that the bigger problem was that Tesco took its eye off the ball on price.

“The acid test is, are you attracting customers?” is Leahy’s response. “Yes we were, more customers each year. Were sales growing? Yes they were. Tesco is the biggest, people expect it to have the best prices,” he said. “I think that some of that trust has been eroded, which has meant that people have shopped around.”

After years of stable leadership, Clarke’s appointment led to a stream of high-level departures and the criticism that there had been a brain drain. “I think it lost too much talent,” Leahy told the BBC. “It’s a big company, Tesco, and also very empowered – people were given responsibility and trusted to get on with their job, so there was a big team of experienced leaders. And too many of those were allowed to go in too short a period of time and so there was a shortage of experience, the kind of experience you need to carefully navigate a business like Tesco through this very turbulent and difficult period of this long, long recession, with these changes in structure of retailing taking place.”

Leahy goes on to say that the company’s culture changed under Clarke and “not for the better”. He said: “I think if you talked to people who knew Tesco, worked in Tesco when I was there, actually the culture was pretty positive and it has to be, because it employs half a million people and you can’t make them do things, you have to motivate them to do things, they’ve got to want to do it.”

In a statement to the BBC, Clarke said: “Although the company had enjoyed unprecedented success in the past, it was plainly the case when I took over Tesco in 2011 that it faced a number of critical challenges that had been building for some time. In bringing about business and cultural change within the company, inevitably some executives who were not considered to have a role to play in the future of the business were let go. There are many others who remain silent out of loyalty to the company, and who would describe Tesco under my leadership very differently.”





http://www.theguardian.com/business/2015/jan/19/former-tesco-boss-terry-leahy-blames-successor-phil-clarke

Deutsche Bank Hold 221.50 221.40 180.00 220.00 Reiterates

Market Buzz

Charles Stanley picks holes in Morgan Stanley's Tesco 'buy' note

Mon, 19 January 2015


Analyst Garry White at UK broker Charles Stanley has picked a few holes in the arguments behind Morgan Stanley's promotion of Tesco onto its best ideas list.
White agrees that the main problem in determining Tesco's valuation is the fact that we do not know where its margins will ultimately settle, but thinks that the US investment bank's assumptions are rather "heroic", or stretched.

Morgan Stanley analysts calculate Tesco has scope to materially improve its UK operations and return to 3.5% operating margin by 2019 and 4% over the long term as it is confident that the opportunity to improve the efficiency of its UK operations is greater than the market expects.

The US analyst team believes Tesco's commitment to slim down its store ranges will free up significant capital, while combining with leading branded goods companies to fight back against hard discounters could have a "very powerful impact", pointing to a French discounters' market share that went from 14.3% in 2008 to 11.7% in 2014 after a similar pincer move by grocery groups there.

With the end of the store space race bringing UK grocery supply into line with demand, White agrees that the argument so far seems pretty rational.

"However, when [Morgan Stanley] looks at asset disposals its assumptions appear to get a little more heroic. The broker has calculated that having theoretically disposed of all its international assets, Tesco's stub could still worth up to 330p, some 48% above the current share price. This can only be described as punchy," White said.

Overall, Morgan Stanley values Tesco's international operations and data analysis unit Dunnhumby between £12.1bn and £17.1bn, compared with the current Tesco market capitalisation of £17.8bn.

There are risks, which Morgan Stanley accepts, that this investment case could prove too optimistic in the event of a full-blown price war, or from a lack of potential buyers for Tesco's international assets.

"Both of these things are possible," cautions White, who notes the City consensus is against Morgan Stanley, with 17 out of 22 City analysts having Tesco as a 'hold', 'sell' or 'strong sell'.

"Morgan Stanley's bullish view is therefore not shared by the rest of the market. Only time will tell if they are correct. However, the assumptions on its valuation once the international part of its business are sold may be a little on the bullish side," he said.

Panorama gave ex-Tesco boss Terry Leahy an easy ride

The former retail kingpin was allowed to stick the knife into his ill-fated, handpicked successor Philip Clarke.

Clarke did hit back in a statement read out on the programme, saying that when he took over, ‘it faced a number of critical challenges which had been building for some time’. (No, really?)


http://www.managementtoday.co.uk/news/1330042/panorama-gave-ex-tesco-boss-terry-leahy-easy-ride/

Chris Blackhurst: Leahy’s anger is all a bit rich — the rot at Tesco set in under him


http://www.standard.co.uk/business/markets/chris-blackhurst-leahys-anger-is-all-a-bit-rich--the-rot-at-tesco-set-in-under-him-9992981.html

Tesco Narrows Search For Broadbent Successor

Sir Ian Cheshire and John Allan are among the remaining candidates for the Tesco chairmanship, Sky News understands.



http://news.sky.com/story/1412066/tesco-narrows-search-for-broadbent-successor

Tesco tries to rebuild relationship with suppliers

Tesco launches social network for suppliers as retailer's turnaround plan gets backing from analysts


http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11362881/Tesco-tries-to-rebuild-relationship-with-suppliers.html

Second gap closing.

Espirito Santo Execution Noble Neutral 234.30 165.00 265.00 Upgrades

Tesco attracts fresh upgrade