Bloomberg News

U.K. Supermarkets Decline After Tesco Reduces Profit Target

January 12, 2012

(Updates with closing share prices in second paragraph.)

Jan. 12 (Bloomberg) -- U.K. supermarkets fell in London trading after Tesco Plc, the country’s largest grocery chain, said profit growth would be “minimal” in its next fiscal year.

Tesco shares fell 16 percent, the most since at least September 1988, to 323.45 pence in London.

J Sainsbury Plc, which said yesterday that third-quarter same-store sales rose 1.2 percent, excluding fuel and value- added tax, fell 5.4 percent to 285.9 pence. William Morrison Supermarkets Plc, the smallest of the U.K.’s four main food retailers, dropped 6 percent to 285.9 pence.

Morrison said on Jan. 9 that sales growth slowed over Christmas as competitors fought harder for business, and forecast that 2012 will be tougher than last year.

Ocado Group Plc, the U.K.’s largest online-only grocer, rose 33 to 74 pence after saying sales increased 16 percent in the Christmas season.

Cheshunt, England-based Tesco said it expected “minimal” growth in its next fiscal year as it invests in discounts and struggles in a tough U.K. consumer environment.

U.K. sales at stores open at least a year fell 2.3 percent, excluding fuel and value-added tax, in the six weeks ended Jan 7., Tesco said. That was worse than the median estimate of 10 analysts compiled by Bloomberg for a 1 percent decline.

--Editors: Sara Marley, Robert Valpuesta

To contact the reporter on this story: Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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