Tesco accelerates UK turnaround drive

Tesco accelerates UK turnaround drive

Tesco will "accelerate" efforts to turn around its UK business while also capping capital expenditure, the company said today (25 February).

In an investor seminar this afternoon, Tesco will detail plans to improve its domestic sales performance and reverse declining market share trends.

The UK's largest retailer has seen its domestic share eroded as consumers shun the group's big-box stores. The company has been hit by competition from both sides as the discounters, Aldi and Lidl, and more upmarket grocers, Waitrose and Sainsbury's, accelerate growth.

Responding to these trends, Tesco launched a turnaround plan for the UK, where it generates the lion's share of group profits, in 2012. Tesco increased its focus on fresh food, revamped its own-label lines, started investing in refreshing its store base while also investing in price.

According to the latest figures from Kantar Worldpanel, in the 12 weeks to 5 January Tesco saw its market share continue to slip year-on-year, dropping to 29.2% of UK sales compared with 30% a year ago.

Tesco said it will detail plans to accelerate its project to refresh stores. The group plans to improve its proposition by increasing investment in "sharper prices, improved quality, stronger ranges and better service".

The retailer also intends to ramp up its efforts to expand in the growth areas of UK grocery retailing - multichannel and convenience.

Tesco added it will maintain its "disciplined" approach to capital expenditure. Tesco will implement a "significant reduction" in planned net new space growth, the company revealed. It will therefore reduce capex to "no more" than GBP2.5bn (US$4.21bn) a year for the next three financial years, the retailer revealed.

Check back later for further coverage of the presentation.

Show the press release

Tesco is today hosting a seminar for investors and analysts.
The seminar will comprise presentations from Philip Clarke (Group Chief Executive), Chris Bush (Managing Director - UK), Robin Terrell (Group Multichannel Director) and Laurie McIlwee (Chief Financial Officer).
Tesco will reiterate its strategic priorities of continuing to invest in its strong UK business, establishing multichannel leadership and pursuing disciplined international growth.  The seminar will primarily focus on the long-term strategy for the UK business, including how the capabilities Tesco has built up over many decades position it well for the future and how it is accelerating its efforts to deliver the most compelling offer for customers in the new, multichannel era of retailing.
Tesco will outline the progress that has been made over the past two years to strengthen the foundations of its UK business.  It will describe how it is accelerating growth in new channels and investing in sharper prices, improved quality, stronger ranges and better service.
Reflecting its strategic priorities, the Group's capital expenditure will be even more focused on online and convenience growth and on an accelerated refresh programme for its larger stores.  Consistent with its rigorous approach to capital discipline, Tesco will describe a further significant reduction in planned net new space growth, with the result that Group capital expenditure will be reduced to no more than £2.5bn per year for at least the next three financial years.
Tesco will describe to investors how 'Winning in the new era of retail' is about putting the customer first and how by delivering the most compelling offer across all channels, it is focusing on increasing loyalty and improving sales, leading to sustainable profits and returns over the medium term, consistent with its financial guiderails.
The seminar will be webcast in full and a copy of the speakers' slides will be available on the Tesco PLC website (www.tescoplc.com) at the start of the presentations at 2.00pm today (UK time).
Tesco will release its preliminary results for the current financial year on 16 April 2014.

Original source: Tesco