Tesco has posted a strong set of half-year results, reporting a 1.1% increase in like-for-like performance in its core UK and Ireland market. Here’s how the analysts saw it.
Clive Black, Shore Capital
“Leading international grocer Tesco has issued a decent set of interim results for FY2018, beating our expectations. We see these results as representing further good operational progress by Dave Lewis (CEO) and his team. Following publication, we are expecting to upgrade our forecasts with respect to FY2018 PTP and EPS. As such, this is welcome news for Tesco’s shareholders and the whole sector, to our minds, noting still high levels of what we deem to be misplaced shorting.”
Alastair Lockhart, Savvy
“At the heart of Tesco’s turnaround is cultural change, which spans from the boardroom to the shop floor, and through into supplier relationships. Walk into a Tesco store, and it feels like a confident business – whether you’re looking at the pipeline of NPD, keener pricing, or, most importantly, perhaps, the colleagues who have the spring back in their steps. There is still much to do, but, crucially, Tesco’s customer experience is improving and its turnaround strategy is paying dividends – both metaphorically and literally.”
Derya Yildiz, Kantar Retail
“Tesco has been under pressure for more transparency in recent weeks, so the retailer will do everything it takes to ensure shopper satisfaction. Shopper experience – both in store and online, to secure shopping trips – is at the core of these efforts. […] As we are counting down for Christmas, Tesco aims to secure the holiday spend ahead of the season with flash deals in key categories like toys. It’s all about taking a good position against the likes of Amazon and Argos, rather than the rest of the Big Four, to win the shopper.”
Danielle Pinnington, Shoppercentric
“Things are certainly looking up for Tesco, and the hard work over the last couple of years is paying off, but with discounters continuing to push hard and the court case over accounting practices now playing out, there is plenty keeping Tesco on their toes. Shoppers will want to feel reassured that old practices have been buried, and that they are at the forefront of Tesco’s thinking – not just profits.”
Bruno Monteyne, Bernstein Research
“Tesco recovery is on track. Group operating profit of £759 million – 8.0% ahead of consensus of £703 million. Even excluding £30 million of property profits, this is still a very big beat. […] Tesco UK & ROI operating margin of +2.13% – seven bps below consensus of +2.2%. However, this comes after consensus had increased leading up to the results. Margin expansion was 32 bps YoY, showing acceleration along the recovery path.”
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
