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Barclays: Tesco's Irish Share Losses 'May Be Moderating'

Published on Jan 5 2015 5:23 PM

Barclays: Tesco's Irish Share Losses 'May Be Moderating'

A report from Barclays European Retail Equity Research has suggested that Tesco’s share losses "may be moderating" in the Irish market, following the most recent set of Kantar Worldpanel market share figures.

Tesco's sales declined by 3.0% for the 12 week period to 7 December, compared to an overall industry sales rise of 0.7%.

"Although the data sounds quite downbeat from Tesco’s perspective, the sales decline of -3.0% is significantly less negative than the -4.7% recorded last time – suggesting a noticeable share improvement over the last four-week period," Barclays commented.

Tesco will be eager to start the new year on a high - the retailer releases its third quarter results this Thursday, January 8, with all eyes on chief executive Dave Lewis' turnaround strategy.

According to a report from Bloomberg, Tesco could be preparing to "axe hundreds of staff" as part of its turnaround plan, while it is also expected to announce "drastic changes" to its contracts with suppliers.

There are fears that job cuts could also be on the horizon in the group's Irish operation.

In a report issued this morning, Bruno Monteyne, analyst with Bernstein Research, said, "Fixing the UK will likely concentrate on price competitiveness and the cost savings measures that allow Tesco to do so. We don't expect detailed plans or planned investments: Dave Lewis doesn't want to give away his plans to customers.

"Strengthening the balance sheet will more likely focus on asset sales (Asia, Bank, Dunnhumby) and capital discipline rather than a rights issue. They will also discuss how to rebuild trust with customers, suppliers and the investment community."

Fellow analyst Dave McCarthy of HSBC told the Financial Times at the weekend that Tesco needs to “start delivering meaningful improvements in sales sooner rather than later, or else it will have sacrificed its margin for no gain and its long-term spiral down will continue. The next few months will be very telling.”

© 2014 - Checkout Magazine by Stephen Wynne-Jones

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