The largest food retailer in the UK – Tesco Plc. has announced that its domestic sales are falling once again due to the overall market slowdown. The sales of the company went 1.5% down during the third quarter of this financial year, and these losses exclude all gasoline and value-added taxes. The spokesmen of the company said that it is performing “in line with market expectations for the full year”.
Tesco Plc. marked a serious deterioration in its sales decline compared to the ones from the second quarter of the fiscal year. This is due to the overall stagnation, but fortunately, it is also a sign that the retailer still tries to be a worthy competition to the Waitrose chain and Aldi and Lidl, which are some of the largest discounters. Tesco has invested about 1.6 million dollars in staff, price promotions and stores renovation, but this hasnt helped the company gain profits. And just to make things worse, the retailers revenue in some international markets such as Thailand and South Korea seems to be falling down, too.
John Kershaw, who is one of the analysts working for Exane BNP Paribas said: “There are few trading highlights but numbers were as expected or even a touch better than feared. Tesco needs to deliver on christmas and the question of long-term margins remain, but it is a resilient statement form Tesco today.”
The Chief Executive Officer of the company – Philip Clarke explained that the grocery market was more challenging than ever for a few months now. He announced that the measures Tesco had taken in order to make its positions more stable were one of the reasons why the short-term sales of the company have been so low recently. Mr. Clarke also said: “Tesco isnt dismissing the threat poses by discounters. The budget chains are doing very well.”
According to some analysts working for HSBC Securities, the only way for Tesco Plc to go back in the game and beat its competitors by increasing its profits, is to “slash prices”. Only time can tell whether the company is ready to embrace such an approach and if yes, what the outcome will be.
According to CNN Money, the current share price of Tesco Plc. is 0.95% up, and its one year return rate is 2.05% up. The 20 analysts offering 12-month price forecasts have a median target of 18.06, with a high estimate of 21.42 and a low estimate of 13.95. The median estimate represents a +6.71% increase from the last price of 16.72.