Shore Capital Stockbrokers expects Tesco to post a marginal improvement in Q1 sales tomorrow (23 June), demonstrating 'further progress with CEO Dave Lewis's stabilisation and onward-recovery programme'.
Shore Capital said that it estimates 'ex-fuel, ex-VAT like-for-like (LFL) sales within a range of 0.0-0.5 per cent', adding that same-store volumes are likely to be robust.
The quarter will be the first since the launch of Tesco's Farm Brands initiative, described by Shore Capital as an initiative that 'fundamentally simplifies the company's supply chain, in-store operations, and so customer proposition in core fresh produce and meat'.
Shore Capital also expects the retailer to experience something of a fightback from rival Asda in the coming months, with the appointment of its new chief executive, Sean Clarke, confirmed for the end of July.
'We are a little more sanguine about Tesco UK's scope to defend its position against Asda. A number of reasons come to mind,' it said. 'In essence, though, these factors are that Asda is already cheaper, nominally, on a conventional basket than Tesco, but that basket is not necessarily an indication of value, as we know price plus quality equals value.
'In this respect, we believe that Tesco has a demonstrably superior basket, and broader choice and capability than Asda.'
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