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Shore Capital: Tesco Ireland Forecast To Post Further Sales Declines In 2014/15

(3 June) Tesco's Irish operation is likely to contract in the coming financial year, before returning to growth next year, according to a company update by market analysts Shore Capital Stockbrokers.

Tesco posts its results for Q1 of its 2014/15 financial year on June 4th.

London-based Shore Capital said that it sees sales in the retailer's Irish division declining 4.2% in the 2014/15 financial year, with like-for-like sales falling 2.5%.

Sales in 2015/16, meanwhile, are predicted to return to growth (+0.7%), with like-for-like sales flat (0.0%).

On its 2013/14 performance in Europe, Shore Capital said: "Bar Hungary, however, LFL sales in European markets in 2013/14 were negative in each market with especially weak performances recorded in Ireland, Czech Republic and Slovakia. The only saving grace of sorts is that the trends in Q4 2013/14 were broadly improving, with each market positive bar Ireland and Slovakia.

"The problem with this point, however, is that Ireland has been by far Tesco’s most profitable European market."

On its UK business, where Shore Capital anticipates a 1.4% decline in retail sales in the coming year, Shore Capital said that Tesco was slow to react to the entry of hard discounters into the market, with the retailer now being "dragged kicking and screaming into the price debate."

It added: "If something as fundamental as pricing is not sound, then it is difficult to be confident about the business, with all of the other steps surrounding quality, range, service and store environment paling into significance."

Last week, Tesco released its annual report, which noted that seven new Tesco stores were opened in Ireland last year, a total of 87,000 square feet worth of space.

© 2014 - Checkout Magazine by Stephen Wynne-Jones

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