Tesco gets boost as recovery plans become clear
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).
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
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?
Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
By Kalpana Fitzpatrick Published
-
What does Rachel Reeves’s plan for growth mean for UK investors?
Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
By Katie Williams Published