AUS
NZ
UK
CA
USA
IND
The supermarket chain, Tesco Plc (LON:TSCO) stated that it is not going to close the bakery counters in-store but many of the stores will decrease the amount of baking done on each of the sites. Due to this more than 1800 members of staff would be at risk of dismissal, if the changes are effected from May 2020. However, the company also said that it would look into the availability of other options for those who want to carry on with the same.
Tesco Plcâs fifty-eight counters will be converted so that all the products can be delivered to customers in pre-prepared condition, before actual baking takes place. However, the top-rated products will continue to be created from scratch with other foodstuffs transitioning to partially baked condition in 201 additional stores.
The company said that it would continue to provide baking from scratch in 257 hypermarkets. It also noted that consumer taste and preferences have changed over the past few years. The consumer is interested in purchasing lesser quantity of conventional loaves of bread and due to this they are looking for a wider variety of options, for example, bagels, wraps and flatbreads as alternatives.Â
The companyâs market share is around 28 per cent of the United Kingdomâs grocery market. But it is under pressure from German budget grocery chains Lidl and Aldi which are increasing their presence in the market and continuously launching new stores. Â
The national officer of the Usdaw union representing bulk of Tesco workers, Pauline Foulkes, stated that it was a very damaging piece of news for those employed in the bakery. The overhaul of in-store bakeries started a year after Tesco Plc indicated that it would shut down new food counters in around ninety of its chain stores and reduce positions at its head office, putting 9,000 jobs in danger. The United Kingdomâs biggest retailer, which employs more than 400,000 staff worldwide, also said the decision was made because of time-starved shoppers using other fresh food, meat and fish counters less frequently.
In August 2019, the company declared around 4,500 job reductions at 153 upmarket Tesco Metro chain stores. The company had stated that this was because of change in customer preferences towards utilising Metro stores for ease of shopping instead of procuring food stuff for the week. Till today, the total number of job reductions announced add up to more than 15,000 over the last twelve months.
Dave Lewis, who is retiring chief executive of the company has devoted his many years in charge cutting expenses and slashing workforce at the supermarket giant, trying to regenerate its profits consequent to an accounting scandal in the year 2014.
Lastly, the company stated that it had commenced an evaluation which will find out whether the bakery business has appropriately transitioned in order to satisfy the changing preferences of the customers.
TSCO - Stock Price Performance
On 27th February 2020, at around 11:02 AM (GMT), by the time of writing this report, the stock of Tesco Plc traded at a price of GBX 234.75 per share on the London Stock Exchange, a decrease in the value of around 2.75 per cent or GBX 6.65 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 241.40 per share.
At the time of writing, the market capitalisation of Tesco Plc was GBP 23.64 billion with regards to the current market price of the stock. The free float and outstanding shares of Tesco Plc were reported at 9.59 billion and 9.79 billion, respectively.
The share price of Tesco Plc recorded at GBX 260.40 as on 16th December 2019 was its 1-year peak price, whereas the share price recorded at GBX 210.70 as on 27th August 2019 was the 1-year low share price. The current share price was lower by 9.85 per cent from the 1-year high price, whereas the current share price was higher by 11.41 per cent from the 1-year low price.
The beta of the stock has been reported at a value of 0.97, representing the fact that the movement of the share price of the company has lower volatility as compared with the movement in the comparative benchmark index.
TSCO â News Updates
On 25th February 2020, the company declared that it has agreed to sell off its 20 per cent stake in Gain Land to its Joint Venture partner, China Resources Holdings. The stake sale will result in net cash proceeds to Tesco Plc of £275 million, which will be utilised for general corporate purposes. This transaction is expected to conclude on 28th February 2020.
On 3rd February 2020, the company declared that Ken Murphy would be taking the position of Group Chief Executive Officer on 1st October 2020 and will be joining the Board on the same date. However, Dave Lewis has decided to continue working with the company until 30th September 2020 as Group Chief Executive.
TSCO â Trading Update
On 9th January 2020, the company announced third quarter and Christmas trading update for the year 2019/2020.
The companyâs sales in the United Kingdom and ROI were reported at £16.8 billion in 19- week period to 4th January 2020. Revenues from Central Europe were reported at £1.92 billion in the 19- week period to 4th January 2020. Revenues from Asia were reported at £1.93 billion in the 19 -week period to 4th January 2020.
During the Christmas period of the year 2019, the company performed well in both value and volume terms with robust performance. Consumer satisfaction with its shopping trip increased further and the company witnessed the highest level of availability in the previous six years. The companyâs online grocery business serviced more than 14 million orders in 19-week period to 4th January 2020 as well as showed a rise in both consumer satisfaction scores and average basket size for the Christmas period in 2019.
The headline sales performance for the United Kingdom as a whole included a -0.4 per cent effect from decreased general product sale as the company continues to improve the sales mix.
On an underlying basis, Tesco Bank revenue increased by 0.1 per cent in the third quarter of FY20, 1.6 per cent over Christmas and 0.5 per cent in 19-week period to 4th January 2020 due to the impact of the decision to quit the mortgage market in September 2019. Tesco Bank revenue was reported at £361 million in the 19-week period to 4th January 2020.
Â
TSCO - Overview of Tesco Plc
Tesco Plc (LON:TSCO) is a prominent retailer which serves thousands of consumers through its stores and online channel every week. The company is involved in Retailing and associated activities and insurance services & Retail banking. The company employees around 450,000 people and has more than 6,800 shops all over the world. The company is based out of three locations, i.e. The United Kingdom & Republic of Ireland, Central Europe and Asia. The first-ever branded product of the company was Tesco Tea in the year 1929.
