The market appears to buy Tesco's plans for its under-pressure UK business, after the Chief Executive Philip Clarke admitted Britain's biggest retailer has a 'long way to go' while attending a store opening yesterday (Monday).
Tesco's shares dropped 20% at the beginning of January following a profit warning. Since then the company has turned in sales figures consistently down on the prior year, while the boss of UK operations, Richard Brasher resigned in March.
News of the supermarket chain's falliblity shocked investors used to Tesco obliterating all opposition through a strategy of rolling store openings and extremely tight pricing.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The firm believes the wheels came off partly because it stopped focusing on the UK. Projects in both the US and Asia came to dominate the headlines but more crucially the domestic store offering was seen to have become jaded.
That's changing, with a £1bn investment programme underway, more staff being recruited to enhance customers' in-store experience and data from Tesco's Clubcard being used to calibrate the offering in each store to reflect more closely the demographic of its area.
The platform for Tesco to deliver all these positive messages was a store reopening in Bishops Stortford, Hertfordshire, attended by Chief Executive Philip Clarke and a bevy of journalists. The context though is difficult. The competition has upped its game and Tesco saw its market share drop from 30.9% in April 2011 to 30.7% in April this year.
It may seem like a small drop but after years of expansion, these are worrying times for Tesco. Nevertheless, with a new strategy in place, the stock has risen nearly 10% in the last three months and, following the Bishops Stortford junket, and consequent press coverage, they have pushed up 0.6% on Tuesday
BS
-
How much gold is in the world?Have you ever wondered how much gold is in the world and who holds it? We take a look at the top countries with the most gold reserves.
-
UK interest rate cut “seems like a certainty” this weekMarkets and economists are confident that the Bank of England will cut interest rates by at least 25 basis points tomorrow, as growth fears ramp up
