Strategic Preview: Q1. March 2013 - May 2013. 3 June 2013. DAVID GRAY. Research Analyst. Strategic Preview: Tesco Q1.
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March 2013 - May 2013
3 June 2013
“We expect Tesco’s domestic business to deliver a satisfactory performance in Q1 with comparative sales broadly flat, although there is the possibility of a slight decline due to subdued general merchandise sales. We also note Tesco’s large store refurbishments have slowed to a mere trickle as the retailer works out how to integrate recently acquired businesses such as Giraffe and Harris+Hoole. While this is sensible, we note Tesco has much work to do with an estate of more than 3,000 stores in the UK – much of which is tired and in need of a refresh. Nevertheless, range improvement is continuing at pace with further progress made on the mid-tier ‘Tesco’ overhaul in the quarter.”
“In international, we anticipate sales will remain subdued, particularly in Central Europe where Tesco is facing tough competition from the discounters. Although we expect Asia to perform better than Europe, headwinds in Korea and China are continuing to come through. We expect Malaysia and particularly Thailand to deliver strong performances offsetting some of the slower trading seen in Korea and China. India remains off the radar for now as Tesco waits to see how new rules on Foreign Direct Investment (FDI) bed down before committing further funds.”
“Despite a relatively uninspiring performance during the quarter, we note Tesco continues to have long term growth opportunities. It is aggressively targeting the convenience store sector in Thailand, the UK and South Korea - a strategy which could lead to wider margins as well as helping resolve the company’s dependence on hypermarket formats , albeit this is more of an issue for the UK.”
Expectations for the Quarter
UK: Q1 Strategic Changes
Global: Q1 Strategic Changes
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Strategic Preview: Tesco Q1
Actual Like-for-Like Sales
Projected Like-for-Like Sales