Tesco’s trading update this week was more keenly anticipated than usual, as it was the first since the launch of its £1bn British recovery plan. The retail giant reported a 1.5% drop in annual like-for-like British sales in the 13 weeks to 26 May. That marked its sixth successive quarter of falling British sales.
What the commentators said
Tesco said its results would have been substantially better if the Jubilee weekend had been included, said James Moore in The Independent. It seems “the supermarket that ate Britain” has been reduced to making excuses about its performance.
However, the actual British figures pretty much met expectations, said Alistair Osborne in The Daily Telegraph. “No one was expecting miracles” from a company just a few weeks into its recovery plan, which will involve refitting thousands of stores. “No, what dawned is the realisation that the international business won’t be coming to the rescue” while Tesco tries to fix the “underinvested” British operation.
Sales are looking “decidedly fizz-free” in China, Hungary and Turkey, while the fall in American sales growth was a nasty surprise. Longer term, the international business may prove less profitable than hoped.
Tesco now “appears to be fighting battles on a number of fronts”, said Neil Saunders, retail consultant at Conlumino. But let’s not overdo the gloom, said Questor in The Daily Telegraph. Tesco has the resources and suppliers to pull off a reinvigorated product range in the same way that Sainsbury’s has boosted the appeal of its Taste the Difference Range, for instance.
There’s no chance of it losing its market leadership as it’s miles ahead of the competition in this regard. “This is not a Microsoft waiting to be taken over by Apple.”