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Tesco’s business foods on supermarket shelves has tough condition in UK but at early stage of recovery

jewelry showcase Direct factory PriceTesco is trying to keep up its pace of growth expectation after sales show a weak result.

Though market condition is tough recently, the like-for-like offering fresh foods on supermarket shelves had sales grew in a row for six consecutive quarters.

Consumer income becomes low due to inflation. In addition, the workers of Tesco said they work hard with its suppliers to keep price low and keep their customers with their best effort.

Tesco are now mainly depending on its higher sales to make profit when the market is tough with conditions of fierce competition and pounds inflation. To focus on its core business of supermarket using stainless shelves for food and plan to cuts costs, Tesco sold off its previous purchase of restaurants, coffee shops, optical shops and other business. Meanwhile, Tesco goes with strategy of takeover of wholesaler and convenience store which is worth of 3.7bn pounds to expand its supermarket advantages. A lot of money was paid during this takeover which leads to the company key members receiving concerns from shareholders and facing questions or even an investigation into the deal from British accountable authority. Under these tough situations, shareholders place questions to the company’s chief executive Dave Lewis for getting award to move his residency to a place near Tesco’s headquarters in Welwyn Garden City.

In addition, the company also has a sales fall due to its bulk products sales retreat from Thailand market.

In 2014, Tesco overstated its profit and was fined 129m pounds in March this year. After that, it had reported a fall of the annual pre-tax profit. Despite the like-for-like sales strip out some new business and make growth, its share has a biggest decline on the FTSE100 by over10% this year. And the pre-tax profit fell upon the above events from 202m pounds to 145m pounds.

But Tesco got an increase over its operating profit and the company is focusing on profitable sales. It seems a weak sign to recovery comparing to measures took by Tesco delaying its pension payment, which make deficit rise from 2.6bn pounds to 5.5bn pounds, and throwing a bid worth 3.7bn pounds to buy wholesaler Booker. Left alone in 2014, Tesco had issued an overstatement of profit about 326m pounds when it still overstated with 250m pounds and now it is under SFO’s probation as well as finding way to restore trust in its business reputation. The offence is serious that made Tesco rather tough to move on in UK stock market.

About the source, cost of imports is pushed up because of weak pound after UK’s vote to leave the EU. And industry structure is shifting from popular luxuries to fresh food and everyday essentials.

However, the industries where Tesco is in have been under pressure continuously for last several years. Tesco hope to draw a line under the overstatement scandal and is nurturing an early stage recovery and becoming stronger than those in most of its tough time, said the company’s chief executive officer, Lewis.

Post time: Jun-20-2017


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