Terrible Tesco’s results?
If a 0.5% decline in like-for-like UK sales signals the worst trading performance in 20 years while half-year profits increased 4.5% to £1.3bn in the UK alone that says as much how good the last 20 years has been as it does Tesco’s current plight.
Sure, trading could be better. But market conditions could hardly be worse the Bank of England increased quantitative easing by a further £75bn as The Grocer was going to press yet like-for-like declines weren’t as bad as the 2% figure analysts forecast at the weekend.
And let’s not forget total sales in the UK were actually up 7.1% on the back of Tesco’s continuing expansion; grocery sales improved (it’s non-food that’s the issue); while strong performances outside the UK underline the defensive nature of this international stock.
To put it another way, with 1% like-for-like growth, landlocked Sainsbury’s CEO Justin King can hardly gloat. It continues to surprise, its non-food sales have impressed and the new Gok Wan clothes range out this weekend has the makings of a masterstroke but its non-food performance comes off a lower base, while its geographic and high street bias also help.
CEO Philip Clarke insisted Tesco was back on the front foot, and understandably so, focusing on the “decisive action” Tesco has taken to address what he had previously admitted was a “lacklustre” UK performance. True, this week’s Grocer 33 will cause continuing irritation, but the Big Price Drop will unquestionably help to address price perception issues. And rivals know it.
We’ve yet to see evidence of the “improvements to the in-store environment” he spoke about, but we can certainly see Tesco is working hard on its range, dominating The Grocer’s products pages once again this week, with two more venture brand launches, a move into branded lamb, and my favourite - a round-calorie range of products.