Hartgreaves and Landsdown have done a full analysis of the results with the following comments:-
Responding to the wake-up call, its UK plan, "Building a better Tesco", is split into six headline aims. Meanwhile, the rumoured pull back from large store expansion was confirmed by a projected 38% reduction in net new store space growth, in order to focus on a revamp of its smaller store format. On the international business front, an 18% rise in group trading profit was accompanied by a promising update on the US "Fresh and Easy" business which, whilst still loss-making, is showing definite signs of improvement and reported an 18% drop in losses.
In many ways, the headline group trading profit numbers encapsulate the current state of the business - showing growth overall, down in the UK and strongly ahead in the international businesses.
Meanwhile, the return on capital figure and reduction of costs show a company committed to a return to favour. The dividend yield of 4.3% is of some comfort to existing shareholders and of some attraction to income seeking investors, whilst the UK plan is flanked by planned improvements to the online and banking offerings.
For now, the market has responded positively to the plans, though there is some way to go. Going into the results the shares had dropped 19% over the last six months, as compared to a 7% gain for the wider FTSE 100.
The results and strategic update are a step in the right direction and will certainly consolidate the consensus of the shares as a strong hold.
Responding to the wake-up call, its UK plan, "Building a better Tesco", is split into six headline aims. Meanwhile, the rumoured pull back from large store expansion was confirmed by a projected 38% reduction in net new store space growth, in order to focus on a revamp of its smaller store format. On the international business front, an 18% rise in group trading profit was accompanied by a promising update on the US "Fresh and Easy" business which, whilst still loss-making, is showing definite signs of improvement and reported an 18% drop in losses.
In many ways, the headline group trading profit numbers encapsulate the current state of the business - showing growth overall, down in the UK and strongly ahead in the international businesses.
Meanwhile, the return on capital figure and reduction of costs show a company committed to a return to favour. The dividend yield of 4.3% is of some comfort to existing shareholders and of some attraction to income seeking investors, whilst the UK plan is flanked by planned improvements to the online and banking offerings.
For now, the market has responded positively to the plans, though there is some way to go. Going into the results the shares had dropped 19% over the last six months, as compared to a 7% gain for the wider FTSE 100.
The results and strategic update are a step in the right direction and will certainly consolidate the consensus of the shares as a strong hold.
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