Which is better Tesco or Sainsburys
The British supermarket chain Tesco is shrinking dramatically. Despite the right countermeasures, the market leader is constantly losing shares.
pre. London ⋅ It has been more than two years since the British supermarket chain Tesco, admired around the world for its innovative strength, shocked the financial markets with completely unexpected weaknesses during the Christmas business at the time. The share price fell 16% that day. Since then, the newly appointed management team has been fighting on all fronts against an industry environment that has suddenly opposed the market leader who was once admired for its steady growth. However vigorously the team around CEO Philip Clarke plans, restructures and advertises, the situation seems to be getting more and more desperate. No sooner has the new financial year started after a disappointing previous year than Tesco has to come up with bad news again.
Tesco disappointed financial analysts with poor sales on Wednesday; the share price then fell by a further 1.5%, which is almost a quarter below the high of the past twelve months. According to the information in the first quarter, consolidated sales fell by 3.7% year-on-year. In the important international business, the stronger pound sterling could be given as a reason; without exchange rate effects, there would have been a small plus of 0.5%. But there were no excuses for the coincidental 3.7% decline (on comparable sales areas without fuel) in Germany.
As Clarke himself admitted, Tesco has suffered the sharpest drop in sales in decades. The market share has slipped below the 30% mark. During the financial and economic crisis, competition started a fierce price war that is still ongoing. Not only do the German discounter Aldi and Lidl, which are aggressively expanding at double-digit annual rates, do better than Tesco, but also their direct competitors Sainsbury, Asda and Waitrose.
Clarke made no effort to gloss over the negative trend. He admitted he couldn't make rosy promises for the next few quarters. Financial analysts also pointed out that the downward trend will probably continue and disappoint expectations for the financial year. But everything is not bad. Clarke emphasized that Tesco is on the right track thanks to vigorous countermeasures. However, this is long and difficult. Clarke started a sharp change of course two years ago. The growth of the hypermarkets, which were less popular not least because of high fuel prices, was halted, the more customer-friendly design of hundreds of stores was initiated, and the rapidly growing online business was successfully promoted. At the same time, Tesco took up the direct price war with the discounters through sharp price reductions on basic everyday products. None of the measures are wrong. The only question is whether investors will be patient enough before Clarke can finally present better numbers in the future.
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