(15 April) In advance of the release of Tesco's full-year results on Wednesday, Clive Black of Shore Capital Stockbrokers believes the retailer's Irish business may have a "long way to go" until it sees significant improvements here.
"The trajectory in Ireland is still one of steep losses in market share and falling sales in what remains a difficult market," Black told Retail Intelligence. "Within that context, Tesco is struggling to draw a line under this period of sustained loss of market share and weak sales. Steps taken to date don’t seem to be resonating with Irish shoppers."
Black is unsure that Price Promise, launched to much fanfare last autumn, has achieved the desired effect in stemming the loss of shoppers to Tesco's rivals.
"I think a track record of companies telling their customers that they are more expensive than somewhere else isn’t a great one," he says.
"In the UK at the moment Tesco has quite a strong promotional campaign; its got Clubcard, it’s got Price Promise and it’s got Fuel Save, yet despite all those things it is falling at the fastest rate it’s ever contracted at. Those elements of its proposition are really not striking a chord with the UK customers at the moment. It leads commentators on the industry to say ‘maybe it is your prices that are wrong’."
Black added that Ireland remains the group's "most significant contributor to European profits", however that profit level has been reduced significantly in recent years.
Last week, following the departure of Tesco's chief financial officer Laurie McIlwee, Shore Capital suggested that the retailer is "not at ease with itself, united in its direction, and comfortable in its own skin."
© 2014 - Checkout Magazine by Stephen Wynne-Jones
