Shares of U.K. supermarket leader Tesco Plc fell as the grocer’s strongest quarterly sales growth for more than five years failed to meet investors’ lofty expectations.
The stock fell as much as 4.1 percent in early London trading after Tesco reported U.K. same-store sales growth of 1.8 percent in the third quarter. Investor hopes had been heightened this week by Wm Morrison Supermarkets Plc’s best Christmas performance for seven years and robust industry sales data.
“Expectations got ahead of themselves,” Clive Black, an analyst at Shore Capital, said by phone. “The share price move is much more to do with analysts being in the wrong place, rather than Tesco.”
Tesco Chief Executive Officer Dave Lewis has revived the retailer as price cuts, improved service and increased product availability have lured customers back into stores. Investors have returned too, with the shares up 38 percent last year. But the company’s progress slowed over the Christmas period, according to Hargreaves Lansdown analyst Nicholas Hyett, leaving investors “worrying whether the group can achieve sustained growth.”
The shares recovered some of their early losses and were down 2.3 percent at 204 pence as of 10:45 a.m.
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.
