Tesco has announced an overhaul of its turnaround strategy for its UK business, which accounts for two-thirds of profits. It is cutting back on expansion and will focus instead on accelerating its store refurbishment programme.
At the same time, it is set to spend £200m on cutting the price of basic goods and will beef up its online offering by introducing more click-and-collect locations. Tesco is abandoning its industry-leading 5.25% profit margin.
What the commentators said
Tesco's rivals "will not be quaking in the aisles", said Nils Pratley in The Guardian. A £200m investment in lower prices isn't much: two years ago Tesco threw £500m at a "big price drop" and "hardly anybody noticed". It doesn't help matters that half of Tesco's floor space is in the large stores, which are in decline compared to online shopping and convenience stores.
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
Clarke seems to be betting that his "behind-the-scenes work will eventually improve" sales and restore Tesco's reputation. This "wishy-washy" approach is likely to take a few years. The new pricing slogan is Down, and Staying Down', said Ian King in The Times. Let's hope that doesn't prove to be a description of the share price.
-
Water companies blocked from using customer money to pay “undeserved” bonusesThe regulator has blocked three water companies from using billpayer money to pay £1.5 million in exec bonuses
-
Will the Bitcoin price hit $100,000?With Bitcoin prices trading just below $100,000, we explore whether the cryptocurrency can hit the milestone.
-
How to profit from rising food prices: which stocks should you invest in?Tips Food prices are rising – we look at the stocks to avoid and the one to invest in this sector.
-
Tesco looks well-placed to ride out the cost of living crisis – investors take noteAnalysis Surging inflation is bad news for retailers. But supermarket giant Tesco looks better placed to cope than most, says Rupert Hargreaves.
-
Tesco sells its retail subsidiary in Thailand and Malaysia for £8bnNews Tesco has agreed to sell its southeast Asian operations to Thai conglomerate Charoen Pokphand for £8.2bn in cash.
-
Tesco should keep its Asian assetsOpinion The £7bn that Tesco could get for its Tesco Lotus business in Asia looks enticing. But holding on to it would be smarter, says Matthew Lynn.
-
Tesco cashes out of the mortgage businessFeatures Tesco Bank has left the mortgage market by selling its £3.7bn loan book. Its 23,000 customers will be moved to the Halifax, a subsidiary of Lloyds.
-
Share tips of the weekFeatures MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
-
Tesco wields the axeFeatures Britain’s biggest supermarket is cutting back on staff and fresh food. Will the move prove counterproductive? Matthew Partridge reports.
-
If you'd invested in: Tesco and Associated British FoodsFeatures Tesco has seen its market value rise almost 50% in a year, while AB Foods has seen shares slide despite a rise in profits.
