Tesco Share Discussion Threads

[the oak tree] 01/4/2020 19:11

Hope you don't mind but wanted to post what I wrote on Sainsbury as in many ways its true for Tesco and indeed other supermarkets. Ive picked Sainbury as an investment for a few reasons: one of which is its a fair bit smaller and that should make it easier for it to move and capitalise on the current situation.

Sainsbury and arguably the rest of the supermarkets have been overlooked as an investment. Here's why:

1. While there has been upfront demand for items like toilet rolls etc which will result in fewer purchases later in the year, the main driver to increased profits for this year will be from taking the money that would have been spent in other establishments such as Greggs, Costa, restaurants, schools, Uni etc and it being spent in Sainsbury. Thats not happened before. Like most establihments this company has fixed costs it has to incur so this increase in turnover will show a much increased profit.

2. Supermarkets are normally in a competitive struggle with each other. The last few weeks and arguable the next month or two has put that on the back shelf. Its mostly not about price it's about being able to buy XYZ for a family or individual. People don't Q round the block only to walk out the store without a purchase because prices have gone up a bit or more likley there are less offers. Sainsbury margin vary but is about the 2% mark. Getting it to 3% might not sound much but thats actually increased your profits by 50%. Thats huge in this industry.

3. They will have increased costs such as overtime for staff, more delivery trucks, 10% bonus for staff but don't miss the big picture. Its driven by demand and will be well compensated for in revenue.

3. As per the Government announcement there is no Business Rates to incur for the next 12 months. As per the company RNS this amounts to a savings of £500k+. In a normal average year that would mean on its own profits would double. FY2020 net profit forecast is £451k.

4. People will be staying at home rather than going on holiday. Again this increases demand. IMO people after a couple of weeks cooking meals at home and not eating out will start buying more upmarket items to cook with. Yes most will be worried about their jobs and won't want to spend too much but with few outgoings e.g. less fuel, less entertainment going to gigs, shows, cinema they will want to spend a bit more on the family meal at home. Those items in a supermarket like Sainsbury have much better margin.

So it's not just about more volume, it's the product mix plus increased prices on these products ie less offers for example, that I believe will probably lead to an outstanding trading update at the end of April when they release results for the last year.

Thats when they IMO get the re rating. Although it may happen when Tesco give their trading update next week.

So many companies have closed with zero revenue coming in. Here we have a company that people are Q to get into. Yet the share price has hardly moved.


IMHO....DYOR

[nathdani] 01/4/2020 17:59

But results are up 5 weeks ago .

[olivert] 01/4/2020 16:48

Results out on 8th April....only 4 trading days before results..

Let's see the MMs play with this one when Tesco is experiencing % Sales increase well in excess of the anything they have ever seen before!

[albert3591] 01/4/2020 16:38

Yas....it will probably rise tomorrow,when the others fall.

[vaneric1] 01/4/2020 09:29

Why not? Everything else is on it's knees. Tesco is actually holding up pretty well compared with many.

[yaszq2001] 01/4/2020 08:53

Why such a big fall for Tesco??

[johnwise] 31/3/2020 17:20

Not a holder of the shares...

Tesco won't be increasing contactless payment limit


Tesco has said it will not be increasing the contactless limit for card or phone payments in its stores from €30 to €50.

However, Tesco said that while it had scoped the project thoroughly and looked at every possible way to introduce the change seamlessly, in order to do so, it would have to carry out a manual fix on over 4,600 terminals in 151 shops across the country.

The supermarket chain said to do this would present too high a risk to business continuity in already extremely busy stores.

"The risk associated with making such a large volume of software updates is very significant, including the potential for disruption to tills, pin pads and self-scan checkouts," it said.

[philanderer] 31/3/2020 13:41

Sainsbury’s growth of 7.4% was the fastest growing of the Big Four grocers during the past 12 weeks, followed by Tesco at 5.5%, Asda at 4.9% and Morrisons at 4.6%.

[nathdani] 31/3/2020 13:26

Traders are imo selling Tesco buying unloved stocks that have been shafted it will turn round soon enough.

[loganair] 31/3/2020 13:20

Aldi/Lidl now account for 14.3% market share with Aldi's market share now being only 1.8% less then Morrisons.

Alcohol sales up 67% due to the closure of pubs and restaurants.

[ladeside] 31/3/2020 13:04

No reason why not. If we were an oil company or an airline, then No, however covid 19 is actually making our business model stronger and so long as the deal clears the required regulatory hurdles then I'd think all parties would want it to succeed and the sooner the better.

[rolo7] 31/3/2020 12:53

Does anyone think Tesco can now sell of there Asia business now and pay a special dividend?

[kazuko] 31/3/2020 12:38

Easyjet does not have a plane in the sky, doesn't know when it will have, yet it is up 6.1% !!! Whereas Tesco is booming sales wise and is down over 3%.... l can only hope it will make sense when Tesco results come next week!

[peteret] 31/3/2020 12:02

And yet this is dropping like a stone.This is really price manipulation.Greggs that has shut all branches and laid of staff is rising.It makes no sense.

[pogue] 31/3/2020 09:40

Everyday is Xmas....

Sales of groceries in the UK in March beat all previous records as shoppers stocked up for a long period at home, according to consumer analysts Kantar.
The busiest spell was 16-19 March, when 88% of households visited a food store, adding up to 42 million extra trips across four days.
In the last four weeks, year-on-year supermarket sales grew by 20.6%.
Kantar's Fraser McKevitt said £10.8bn sales in the past four weeks were "even higher than levels seen at Christmas".
The figures have mainly risen because of people making extra shopping trips, rather than spending more on each visit.
The average household spent an extra £62.92 during the past four weeks, equivalent to adding five days' worth of groceries.
London had the biggest increase, with grocery spending up by 26% during the month.....

[hazl] 30/3/2020 16:34

Well we had a home delivery from Waitrose....try them in their turn and no eggs .

[owenski] 30/3/2020 16:10

First trip to a 'big' Tesco. queues not too bad, everyone spaced apart and the whole queue managed by staff as was the queue for the tills, quite impressed at the organisation. I went mid afternoon, so not sure what weekends or other times are like.

Well stocked with the exception of some tinned stuff and pasta still, but essentially everything else is there, so once the numpties realise there's no reason to buy 800 tins of tomatoes in one go, it'll likely get back to a sort of normal shopping quantity rhythm.

Noticed there are no 'deals' in current climate, so everything is at full price and some stuff seems a lot more expensive. Therefore, I'm inclined to think they'll have some decent results for the next period.

[ignoble] 30/3/2020 12:46

Possible, although today only allowing 3 of anything...
Couple of overfilled trolleys but otherwise sensible.
Never quite know if the big shop is for a Care Home or some such before I judge

[pogue] 30/3/2020 12:39

I have avoided going to any supermarket so far but would assume people are buying a lot more per person to avoid having to return plus no household member is missing meals due to be being out the house so more food needed, so numbers down but spend per person up I would expect.

[nathdani] 30/3/2020 12:33

Turnover has to down go now with shorter opening ,only half tills open due to 6 foot rule ,less customers allowed at one time.

[kazuko] 30/3/2020 12:12

The only way is up... there is nowhere else for people to spend their money...buy their food and drinks... clothes.... pays a dividend + special.... monopoly... as an earlier comment says - its a NO-BRAINER. Buy.

[alphorn] 30/3/2020 12:11

Yep, both Lidl and Aldi. To gain acceptance by the shoppers they both source as much produce locally as possible. Tinned stuff etc comes from Germany.

[ignoble] 30/3/2020 12:08

Didn't realise that you had Lidl and Aldi....

[ignoble] 30/3/2020 12:03

Hiya Alp
In a funny sort of way, it is now a better experience at a Supermarket
People not window shopping, keeping moving to a large degree
Make the aisles one way and all will be well.