Broker warns over refit cost timebomb The multiples could be sitting on a time bomb as the sales hikes they need to justify massively expensive refits are unlikely to materialise, warns a new report from Schroder Salomon Smith Barney. Mix together slowing sales growth, an increased bout of competition and a massive 50% increase in capital expenditure over the last two years, and you have a pretty explosive combination, warns the broker. Aggressive spending by the multiples on refits is unsustainable, it says, "as the sales uplifts required to justify the aggressive investments are not forthcoming". The comments reflect a growing feeling in the City that "a lot of money is being wasted on refits that will not pay for themselves". And even Tesco's targeted returns for its relatively low cost refits look ambitious, claims Schroder Salomon Smith Barney. Tesco's forecast of a 20% plus cash return on investment from its £150m refit programme is difficult to reconcile with the sales uplifts it is reporting, according to the broker. Moreover, Tesco's belief the bulk of sales uplift will come in years two and three after a refit is "highly improbable". Tesco said it was confident in the returns it has forecast for its Refresh refubirshment programme, but stressed capex for refits represented a minute proportion of overall spending. {{NEWS }}