Tesco slumps as investors shop elsewhere - UK
IOL Business - Apr 7th 2016, 09:50
London - Tesco's stock market rally faltered yesterday, as investors cashed in on this year's 27 percent share price rise despite fresh evidence that its turnaround plan has been paying off.
Sales in the 12 weeks to 27 March were down just 0.2 percent according to Kantar Worldpanel, and Fraser McKevitt, the research firm's head of retail and consumer insight, said the supermarket could return to growth in the next few months. Shore Capital's Clive Black said that after a better-than-expected Christmas, when sales jumped 1.3 percent, shareholders might have wanted to see “something a little more robust”.
A Deutsche Bank downgrade from “buy” to “hold” on the back of the recent share price strength also played its part and Tesco slumped 1.70 percent to 187.60.
Black said investors might want to hang on to see Tesco's annual results next week. “To us (Tesco) has demonstrably improved in-store execution and there are signs it is getting on to the front foot.”
The grocer has been trying to come back from a string of profit warnings, an accounting scandal, and the rise of discounters Aldi and Lidl. Under chief executive Dave Lewis, it has shed non-core assets, lowered prices and improved products and service.
The Kantar data also revealed that Asda continues to lag behind its rivals (Tesco, Sainsbury’s, and Morrisons) as its sales plunged by 3.9 percent. Sainsbury's, which last week received the backing of Home Retail Group bosses for its £1.4bn takeover of the company, managed 1.2 percent sales growth.
The bounce will be of little comfort to the hundreds of Sainsbury's workers whose jobs were put at risk yesterday by a change to its training programmes.
Kantar said Morrisons' sales were 2.4 percent lower as the impact of store closures showed in the figures. The Co-operative, however, had its fastest growth since it bought Somerfield in 2011, with sales up 3.9 percent. At Lidl and Aldi, sales climbed 17.7 and 14.4 percent, respectively.From © Independent On-line 2016. All rights reserved.
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