On Friday, Tesco said that group like-for-like sales rose 1.8% in the first quarter of the year, with its UK and Republic of Ireland operations seeing 3.5% growth, and its Booker wholesale division posting an impressive 14.3% sales rise.
Commenting on its performance, Dave Lewis, Tesco chief executive, said the business remains “well-placed to serve our customers better and deliver on our medium-term financial ambitions.”
Here’s how leading retail analysts saw the group’s first quarter:
Russ Mould, AJ Bell
“Sainsbury’s chief executive Mike Coupe may have been caught singing ‘We’re in the Money’ when his guard was temporarily down but Tesco boss Dave Lewis must be feeling equally pleased with himself after the first-quarter sales figures. Sales grew on a like-for-like basis for the tenth straight quarter on a group-wide basis, and also in the vital UK market, while the shares are trading at their highest level since summer 2014.”
“The dark days of 2013-15 now seem to be behind it, as Tesco continues to invest in both product (via an overhaul of its own-brand offerings) and price, in a bid to combat the threat posed by the discounters, Aldi and Lidl, as well as ongoing competition from Sainsbury, Morrison, Asda and online rivals such as Ocado.”
Barclays European Food Retail Equity Research
“UK LFL sales growth of +2.1% was modestly ahead of the BBG-collected consensus of +1.9%. To have slowed down only slightly from 2H17/18 (+2.3%) is a good achievement given lower levels of inflation in the market, tougher comps and generally unhelpful weather in the quarter. Tesco highlights the progress with its own label re-launch (2,850 products completed out of the >10,000 planned), and we note the additional price investment made at the end of 1Q.
“Although the statement says nothing on the important topics of profitability and cash generation, we believe that if current momentum can be maintained then a strong 1H should result in October.”
Clive Black, Shore Capital
“LFL sales in the UK rose by 2.1% (SC estimate 2.0%) embracing to our minds easing inflation and sound volume progress, the tenth consecutive increase in core chain same store sales, so growth-on-growth.
“Beyond the trading data and Booker integration, Tesco continues with broader strategic work to place the business on a stronger long-term footing, revolving around de-leveraging. Hence, in Q1 there was an effective bond tender, which will have a beneficial effect on net financing costs in FY2020 in particular. Additionally, returning to the aforementioned problem child of General Merchandising, Charles Wilson announced the closure of Tesco Direct, its online non-food operation in the UK, which is part of ongoing work to improve the financial performance in the respective categories.”
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
