UK DIY News
The week ahead: Tesco to reveal fall in sales
Tesco’s increasingly aggressive battle with its rivals will be laid bare this week when it unveils a fourth quarter of declining sales in its UK stores.
The weak showing among its 2,500 British supermarkets and convenience stores is likely to overshadow a more solid performance in its expanding overseas markets.
Tesco has suffered more than its main supermarket rivals, in part because it sells a greater percentage of discretionary non-food goods, where shoppers have been cutting back the most.
Retailers are struggling to keep the tills ringing as consumers are squeezed by a triple whammy of stubbornly high inflation, muted wage growth and government austerity measures.
In a trading update on Thursday, Tesco’s new boss Philip Clarke will reveal the impact of its £500 million “Big Price Drop” campaign, which saw the cost of 3,000 items slashed.
The move triggered a robust response as competitors rolled out their own schemes, such as Sainsbury’s Brand Match campaign.
Tesco revealed its worst sales performance in two decades at the half-year stage, with sales excluding additional selling space and new stores, VAT and petrol down 0.9 per cent. However, this covered the period before the price-cutting campaign kicked in.
While the group is confident the £500m “investment” will win customers and eventually boost revenues, analysts believe the short-term impact will be to depress sales.
The analysts forecast underlying sales at its UK stores to be somewhere in a range of down 1 per cent to up 0.5 per cent in the 13 weeks to 26 November, which is Tesco’s financial third quarter. Most in the City are forecasting a fall.
Rod Salmon, an analyst at brokerage Numis Securities, is forecasting little change in the trading situation since the half-year as the impact of price cuts will have been diluted by renewed pressure from competitors and the deteriorating economic backdrop.
Numis is forecasting a decline in UK like-for-like sales, excluding VAT and fuel, of 0.3 per cent.
Tesco’s profits, which were up 12 per cent at £1.9 billion in the last financial year, have been driven by solid sales in its international division, boosted by continued growth in China, India and South Korea. A previously strong Thailand is likely to have been hit by the flooding in Bangkok.
Analysts expect group sales to have risen by a high single digit percentage.
Source : Scott Reid – The Scotsman
www.scotsman.com/business/tesco_to_reveal_fall_in_sales_amid_price_cutting_fight_with_supermarket_rivals_1_1990775
Insight provides a host of information I need on many of our companys largest customers. I use this information regularly with my team, both at a local level as well as with our other international operations. Its extremely useful when sharing market intelligence information with our corporate office.