Quite an eye catching headline - and entirely accurate. Yestarday in just one day Tesco lost £5bn. That is the companies value fell by £5bn. Quite a shocking figure which comes on the back of quite a shocking performance over the christmas period. While Tescos LFL (Like for like - so just comparing stores that have been open for over a year) fell in the UK by 2.3%, while it's competitors, Sainsburys for example rose by 2.1%. Given that we have had a decade or so of phenomonal growth from Tesco these results represent a shock to the markets thus the share sell of resulting in the £5bn loss.
I have frequently spoken on Tesco - here & in other forum. They have made a number of key mistakes in my mind and have confused their position in the market. They are giving away too much profit margin through promotion & loyalty incentives, and are rather stuck in the middle between Asda who is unquestionably perceived to be cheaper & Sainsburys who is generally perceived to be better. They seem to want to grow by adding more and more small format stores but there is growing local resentment to the perceived domination of Tescos in some areas leading customers to actively seek alternatives where possible. I cannot see that Tescos will again grow their market share in the UK & rather see them stagnating for many years around the 30% mark.
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