Sunday, June 8, 2008

Tesco PLC News Update: Tesco PLC to Report First Quarter Sales and Profit Numbers Tomorrow; Stay Tuned

United Kingdom-based Tesco PLC , which owns Fresh & Easy Neighborhood Market in the U.S., is due to report its first quarter sales and profit numbers tomorrow, Monday, June 9, 2008.

The pre-reporting consensus among financial analysts in the UK who follow Tesco closely is that the retailer will report solid first quarter numbers for the beginning of the year for its UK business, despite losing a fraction of its sales market share to the UK Morrisons supermarket chain (number four in market share) primarily, to small-format deep discount food retailers Aldi and Lidl in the UK market secondarily.

Tesco has lost about three-fourths of one percent of market share in recent times. The retailer currently controls about 31% of the total UK food and grocery sales market. Wal-Mart-owned Asda is number two, Sainsbury's is a very close number three, and Morrisons if number four. Small-format deep-discount grocers Aldi and Lidl have been gaining share recently in the UK market as well, not just at the expense of Tesco but also at Asda's and Sainsbury's expense.

"Over the quarter as a whole, Tesco's growth has improved relative to the fourth quarter (of last year) says Deutsche Bank," whose retail industry analysts are forecasting a 4 per cent increase in same store sales growth in the UK.

Citigroup basically concurs, predicting first quarter same store sales growth of 3 -to- 4% for Tesco's UK business.

The investment analyst consensus doesn't hold for Tesco's international business however.

For example, JP Morgan says there's been a "marked slowdown" in international sales growth for Tesco. The broker writes that the "19 per cent growth achieved in the first five weeks of the year already benefited from a weaker sterling, perhaps implying ex-currency growth in the very low double digits, from the 21.7 per cent in the fourth quarter for last year."

The investment firm adds that the fourth quarter "was boosted by about 6 per cent by consolidation in China." JP Morgan therefore "assumes a 13 per cent growth at constant exchange rates in the first 13 weeks of the year." Currency changes are estimated to boost international growth by 12 percentage points to 25 per cent, writes the investment firm.

Tesco will not break out its sales and profit numbers separately for its Fresh & Easy Neighborhood Market USA food and grocery retailing venture, nor has it done so to date. However, Tesco PLC CEO Sir Terry Leahy is publicly on the record as saying the company will break out those sales and profit figures in September, 2008 when it reports fiscal year numbers.

Fresh & Easy Buzz will report on the Tesco PLC first quarter update from the retailer tomorrow, along with offering some analysis of those numbers.

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