Tesco Plc (TSCDY, Financial)(TSCO.L, Financial) is due to report its interim results for the year ending February, 2012 on Wednesday, October 5.
A declining UK economy will, for the first time since the early 1990s, produce negative results for UK like-for-like sales. Analysts are predicting a decline of around 1% for this segment, although this decline has increased to around 2% for the second three months.
A push into discretionary items such as books, DVDs, electrical goods and clothes combined with turbulent economic conditions have been blamed, by analysts, for the fall. Twenty percent of UK sales are discretionary. Tesco responded that Tesco is not weak; it is the economic environment that is weak.
UK July food sales, as reported by the Office for National Statistics, declined. This suggests people are placing fewer goods in their shopping trolleys. A decline in this figure is a rarity.
Consensus forecasts from a poll of 15 analysts suggest that revenue will rise to GBP 31.86 billion which will increase underlying profits by 7% to GBP 1.84 billion. Earnings per share are expected to hit 16.31p.
Meanwhile, octogenarian investor Warren Buffett increased his stake in Tesco last week through the purchase of 34 million shares. Buffett, through his conglomerate Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial), now holds a 3.64% stake in the company.
The purchase comes shortly after the company stated its loss-making Japanese division will be sold. A declining share price placing the company on a rolling multiple of under 10 also played a role.
Buffett, whilst still somewhat critical of Tesco’s ailing U.S. progress, has given the thumbs up to Philip Clarke, Tesco’s new CEO, who took over the role from Terry Leahy earlier this year.
Clarke also presided over the company’s decision to float some of its property assets in Thailand. This will release more cash from property, an ongoing strategy for Tesco, in order to invest in India.
The Tesco share price is trading at 2006 prices despite book value increasing by 76% over the period.
A declining UK economy will, for the first time since the early 1990s, produce negative results for UK like-for-like sales. Analysts are predicting a decline of around 1% for this segment, although this decline has increased to around 2% for the second three months.
A push into discretionary items such as books, DVDs, electrical goods and clothes combined with turbulent economic conditions have been blamed, by analysts, for the fall. Twenty percent of UK sales are discretionary. Tesco responded that Tesco is not weak; it is the economic environment that is weak.
UK July food sales, as reported by the Office for National Statistics, declined. This suggests people are placing fewer goods in their shopping trolleys. A decline in this figure is a rarity.
Consensus forecasts from a poll of 15 analysts suggest that revenue will rise to GBP 31.86 billion which will increase underlying profits by 7% to GBP 1.84 billion. Earnings per share are expected to hit 16.31p.
Meanwhile, octogenarian investor Warren Buffett increased his stake in Tesco last week through the purchase of 34 million shares. Buffett, through his conglomerate Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial), now holds a 3.64% stake in the company.
The purchase comes shortly after the company stated its loss-making Japanese division will be sold. A declining share price placing the company on a rolling multiple of under 10 also played a role.
Buffett, whilst still somewhat critical of Tesco’s ailing U.S. progress, has given the thumbs up to Philip Clarke, Tesco’s new CEO, who took over the role from Terry Leahy earlier this year.
Clarke also presided over the company’s decision to float some of its property assets in Thailand. This will release more cash from property, an ongoing strategy for Tesco, in order to invest in India.
The Tesco share price is trading at 2006 prices despite book value increasing by 76% over the period.
