Tesco Trump Arrives, Just in Time for Turkey Season
< Tesco supply chain free from crisis?
If there is no immunity, well vaccinated. In the six months to August, sales rose 3% to £27.3 billion, while profits jumped more than 100% to £1.1 billion.
Chris Daly, CEO of the Chartered Institute of Marketing, says: “This morning’s positive results show that Tesco is one of a minority of retail businesses that have managed to emerge relatively fully for the past 18 months. The supermarket chain has clearly benefited from increased sales due to the busy summer.Tesco, while wisely prioritizing its customer experience, relaunched its Clubcard plan in July and successfully tested the concept at its head office. After announcing the development of check-out free stores, it has managed to remain shopper friendly.
Does Gareth Southgate deserve some credit?
The efforts of Harry Kane, Gareth Southgate and co who gripped the nation late summer with a run in the final of the Euro 2020 tournament are certainly part of the story. Tesco sold a lot of lager for the games.
Families living in the UK also helped the supermarket giant.
Is Tesco an Acquisition Target?
With a stock market value of £20 billion, this looks like a big meal for anyone. The interest in the sector from deep-pocketed private equity companies is so strong, however, that you cannot rule it out completely.
How is CEO Ken Murphy doing?
Well, all of a sudden. To this day questions were being raised about whether his leadership was dynamic enough. Some in town were whispering that they lacked a big picture, big vision, strategy type-stuff.
The stock jumped 5% to 267p after today’s results, indicating that some skeptics have started giving it credit.
So, Christmas isn’t canceled?
Looks like it’s back. Murphy promises not to have a turkey shortage and thinks Tesco will deal with whatever supply chain issues they face.
He added: “Against a background of profound transformation, Tesco has a number of unique advantages. The scale and reach of our store estate and online operations in the UK is unmatched. Our ability to reward loyalty through Clubcard enhances our relationships with customers. Our world-class food retail expertise coupled with our strong supplier partnerships ensure we can provide our customers with great value and quality while removing the reason to shop elsewhere. Together, these forces mean That Tesco can anticipate and respond to market changes, meeting customer needs better than anyone else.”
Tesco launched a £500 million share buy-back program, promised more in the future, and raised profit forecasts.
Murphy said: “We’re competing. I don’t expect the challenges to go away, I just hope we get over them.”
What do analysts say?
John Moore, senior investment manager at Brewin Dolphin, said: “Instead of consolidating after a period of good trading, Tesco is fighting with a strong set of results for the past six months and a new strategy for the years ahead. Planning for cost discipline, an increased customer offering, investment in its operations, and shareholder returns provide a positive direction following the company’s restructuring in recent years. While Tesco’s shares currently trade at a relatively low valuation of the company “This may be addressed by the share buyback program announced today – an option we may see more companies adopting relative to paying higher dividends on the back of recent tax changes.”
Richard Hunter at Interactive Investor said: “Investors are dancing down the aisles as profit upgrades and a strong balance sheet provide reason to rejoice. Tesco, a cash-generating giant, reported the recent sale of its Asian unit. In addition to the 18.5% reduction in net debt, the comparison of pension contribution after lump sum payment after sales has come down, while some COVID-19 costs have also been reduced year-on-year. The year is fading away.”
What’s next for Tesco?
The company is testing a fast-track grocery service — Whoosh — from its convenience stores, and it’s now in 60 stores. It’s a highly competitive field, but perhaps Tesco’s financial strength gives it a clear advantage.