Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
REPORTS that Tesco (TSCO) plans to expand its use of a train service to bring goods from Spain into the UK, could mean crisis at Christmas is averted - to an extent.
But the ongoing shortage of lorry drivers, which is impacting deliveries and leaving shelves and freezers bare though is still a headache for Tesco. Add in delays to goods coming into the UK from Asia, which could mean this year’s must-have toys might not arrive, a shortage of turkeys to meet demand for Christmas dinner and this could be the year that all Tesco’s Christmas nightmares come at once.
The supermarkets may have been lauded for keeping shops open and the nation fed during the pandemic to date, but that might turn out to have been the easy bit. Tesco chief executive Ken Murphy, has long been crowing about how well the supermarket giant has coped, thanks to its detailed planning and close ties with suppliers. Its size and scale give it weight, but this is a retail-wide problem.
This is - or rather should be - the time of year when retailers get busy, stocking their warehouses and filling their shelves with all the goodies that festive shoppers crave and which traditionally makes Christmas a bumper time of year for the entire retail sector.
Far from being a normal year though - not even in ‘new normal’ terms right now - the next few months could very well see the bumper festive trading season at risk.
Tesco is, of course, not alone. All the supermarkets are facing the same problems, more or less. But Aldi’s announcement, that it plans to invest £1.3 billion in its UK business over the next two years, creating more than 2,000 jobs, as part of a longstanding plan to reach 1,200 stores by 2025, from the current 920 stores in the UK at present, is a timely reminder of another battle Tesco also has on its hands.
At one stage, sales were rising faster at Tesco than at Aldi for the first time in more than a decade. But this fight for supermarket dominance is far from over. Tesco's sales growth slowed sharply as soon as lockdown was eased. And that hit its first quarter.
UK like-for-like sales, excluding fuel and VAT sales tax, rose 0.5% in the 13 weeks to 29 May. That was ahead of analysts' forecasts for a fall of 1%, but down from growth of 8.8% in the previous quarter. Against the same quarter in 2019, before the pandemic struck Tesco was looking at like-for-like sales up 9.3%.
Tesco is putting on a brave face while fighting battles from all angles. How bleak a mid-winter it faces remains to be seen.
Tesco’s first-half results are due out on Wednesday.
More on Tesco
Important information: Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
Share this article
Market news today - Contrarians sense a turning point
What’s driving your investments this week?