Jump to content

Tesco shares: where next as CEO warns of ‘change in customer behaviour’


Recommended Posts

Inflation is stalking every corner of the UK economy as the Bank of England warns it may now push further out to 11%. Today Tesco chief executive, Ken Murphy, warned of a change in customers’ attitude to spending.

 

 

 Jeremy Naylor | Writer, London | Publication date: Friday 17 June 2022 

Tesco trading update

There's been a first quarter (Q1) trading update this morning from Tesco, the UK's largest supermarket group, and it makes for interesting reading, not for the numbers themselves, but more as a result of a statement from the chief executive.

Let's take a look at what the statement said in terms of the sales figures. Expectations have been for a drop of 0.5% in sales. In fact, it came out with a decline of 1.5%. So that itself is worse than had been expected.

But, whilst the company says it is very difficult to separate from the significant impact of lapping last year's lockdowns, the company is seeing some early indications of changing customer behaviour as a result of the inflationary environment.

The chief executive is highlighting this because he feels that this is the really big indicator as to future trading. Customers are facing unprecedented increases in the cost of living, according to the statement. And it is therefore even more important that we work with our supplier partners to mitigate as much inflation as possible. In other words, try to screw them down in trying to get their prices down, which, of course is even more difficult because they're incurring higher costs as well.

Tesco share price

But the naked truth is, I think if we look at the share price chart of Tesco, and you can see this because we've seen this drop since the recent highs back on the 28th January all the way up here at 304, here we are now at 248.

The bottom line is, people are now having to make some interesting decisions. And obviously people would far rather feed their children than buy an extra pair of shoes, for example, so people are beginning now to be more selective about what they do with what little money they now have at the end of the month.

And they're choosing to concentrate on the must-haves rather than the luxury items that might otherwise have gone through the tills and Tesco would otherwise have benefited. So clearly, there are some headwinds ahead. It's not just Tesco it's every single area of the retail market.

We saw this yesterday with Boohoo and ASOS warning about the outlook for future profits, and Tesco pretty much doing the same sort of thing.

A warning shot to investors that things could creep up on them quite fast if they don't do something about it to try and mitigate this increase in costs. But whichever way you cut it, Tesco is finding the going tough.

 

 

 

 

 

ig group.PNG

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,631
    • Total Posts
      91,896
    • Total Members
      41,907
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Tinypex
    Joined 24/03/23 16:01
  • Posts

    • Charting the Markets: 24 March The FTSE 100, DAX 40 and Nasdaq 100 slide on renewed banking woes while EUR/USD, EUR/GBP and GBP/USD drop as the US dollar, gold appreciate due to flight-to-quality flows. Crude oil and copper tumble on recession fears.  Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 24 March 2023         This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.  
    • Market Breakdown | WTI Oil, EURUSD, GBPNZD, EURAUDHere are the updates & outlook for multiple instruments in my watchlist.1️⃣ WTI Oil daily time frame️The market is trading in a long term bearish trend .After the last sharp bearish movement, the market is steadily recovering.Ahead, I see a major horizontal supply area.Probabilities are high, that the next bearish wave will initiate from there.2️⃣ EURUSD daily time frameAfter a breakout of a solid daily resistance, the market is preparing for its retest.Watch carefully the underlined zone and look for buying opportunities from there.3️⃣ EURAUD weekly time frameThe pair is currently approaching a weekly horizontal resistance cluster.Taking into consideration, that the pair is quite overbought, probabilities will be high to see a pullback from that4️⃣ GBPNZD daily time frameThe pair is currently retesting a broken neckline of an ascending triangle . As we discussed earlier, the trend line of a triangle and its neckline compose a contracting buy zone now.Chances will be high that the next bullish wave will initiate quite soon.For Additional confirmation use: Divergence Indicators
    • #CHFJPY: Classic Bearish Setup 🇨🇭🇯🇵   🔻CHFJPY has nicely respected a confluence zone based on a horizontal 4H resistance and a 0.5 retracement of the last bearish impulse.   The price formed a double top pattern on that and broke its neckline.   Probabilities will be high that the pair will drop lower soon. Goals: 141.172 / 140.363  
×
×
  • Create New...