Tesco set for another profit fall - how?

14 April 2014

tesco How on earth do you cock-up a business like Tesco? They've got all the suppliers in their pockets and own a terrifying amount of shops - all you need to do is make sure you have stuff people want and not rip them off. Surely they've done the hard part?

However, they've managed it and they're all set to reveal a second year in a row of falling profits, which will heap untold pressure on chief executive Philip Clarke

Industry figures show that Tesco's market share falling to 28.6% in the 12 weeks to March 31, which is down from 29.7% in the same period a year earlier. Of course, Tesco are still loaded with pre-tax profits around the £3bn mark, but that'll be down by 15% for the full year.

Clarke is in the middle of a turnaround plan, which sees Tesco again focusing on the UK after failing to win over people abroad. The retailer is scrapping more than 100 major store developments and instead, concentrating on convenience shops and online sales.

Still, that hasn't stopped finance director Laurie McIlwee quitting his post of 14 years, allegedly thanks to no confidence in Clarke's strategy. He said that he'd hang around until a replacement is found, but warned that Tesco faces a period of “unprecedented change” in the supermarket industry.

Meanwhile, Aldi and Lidl are chipping away at the market share of the big supermarkets.

Looks like the big guns are weighing up whether or not they should have a dramatic change with their pricing strategy, sacrificing some profit to regain lost market share and slap down their rivals. Tesco had better hurry up and make a decision because it certainly looks like the supermarkets all have the same idea.

TOPICS:   High Street News

2 comments

  • Savvyshopper
    People are seeing through their iffy promotions. (and realising they've been ripped off for a while)
  • Pj
    I used to buy everything at Tescos then realised they were probably taking advantage of my laziness. In my opinion, it's the minimum quality they can get away with for the maximum price they can get away with. The final nail in the coffin was when I realised that larger packs of stuff typically worked out dearer per 100g or 100ml than buying smaller packs. Tescos has been pulled up for this on several occasions and seems to give the stock answer "we sell loads of products so sometimes get the pricing wrong". Yeah and I'm about to be elected the next pope. I think people are all for successful british businesses but don't like it when pure greed takes over and the customer is treated like a mug. I think I read a comment on this website that the only thing Tescos doesn't sell is 'souls' and that's only because they haven't worked out how to yet. What finally did it for me was when I read that Tescos have brought up vast tracts of real estate simply to stop other grocers from being able to set up shop and provide local competition. Sell me decent food at a decent price and I will be happy to shop with you Tescos. Play your games and I'll go elsewhere.

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