Tesco (TSCO)

[idpickering]

Tesco PLC Interim Results 23/24.

Delivered strong financial performance driven by relentless focus on value for customers:

Strong sales across the Group, with Retail LFL7 sales up 7.8%; inflation fell across the half, with volume and sales mix trends ahead of expectations:

UK & ROI LFL sales up 8.4%, including UK up 8.7%, ROI up 6.9% and Booker up 7.5%

C.Europe LFL sales up 0.9% reflecting strength of LY base and market volume contraction due to sustained high inflation

Retail adjusted operating profit5 £1,417m, up 13.5% at constant rates, including Save to Invest delivery of c.£290m

UK & ROI adjusted operating profit £1,371m, up 17.2%, with accelerated cost savings and a resilient volume performance offsetting significant cost pressures

Central Europe adjusted operating profit £46m, down (41.8)% due to a significant decline in Hungary driven by the impact of currency devaluation on input costs and regulatory actions; Slovakia and Czech Republic performing well

Tesco Bank adjusted operating profit £65m, up 25.0%, primarily driven by strong income growth; £250m special dividend returned to the Group reflecting the strength of Bank's balance sheet

Strong retail free cash flow6 £1,368m, including a positive working capital inflow of £368m

Net debt3,6 improved by £605m since year-end due to strong cash flow & Bank special dividend; net debt/EBITDA ratio 2.3x

Dividend;

Interim dividend per share of 3.85p, in line with our interim dividend policy at 35% of prior year full year dividend

The interim dividend was approved by the Board of Directors on 3 October 2023. It will be paid on 24 November 2023 to shareholders who are on the Register of members at close of business on 13 October 2023.

A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their dividends in the shares of the Company. For those shareholders electing to receive the DRIP, the last date for receipt of a new election is 3 November 2023

https://www.investegate.co.uk/announcem ... 24/7794914

Ian (I hold).

[idpickering]

JPMORGAN DOWNGRADES TESCO TO 'UNDERWEIGHT'

JPMorgan Cazenove downgraded Tesco on Friday to 'underweight' from 'neutral' and cut the price target to 230p from 240p as it took a look at the European food retail sector, highlighting its cautious stance.
The bank noted that its concerns since it downgraded the sector back in September were based on disinflation triggering lower like-for-like sales, impacting margins and valuations. JPM said it sees this as recurring in 2024/25.

"We see Tesco's outperformance previously linked to executed self-help and macro tailwinds, therefore unlikely to be structural/sustainable over time without incremental investment," it said.

The bank noted that Tesco shares are up 25% year-to-date, versus its price target indicating 15% downside.

"Long positioning is crowded, whilst Tesco is now past peak positive newsflow/LFLs/margin/free cash flow/capital return cycle," it said.

https://www.hl.co.uk/shares/shares-sear ... ary-6.333p

The above quote is from an item in the Company News segment of the TSCO page on HL.

TSCO are down 1.25% as I type. Whether that's due to the above is up for grabs

It won't budge me from holding TSCO though.

Ian.

[idpickering]

Q3 and Christmas Trading Statement 2023/24.

Performance highlights.

UK: Continuing to outperform the market, with stronger than expected volume growth

Strong market share performance, up +15bps to 27.9% in the four weeks to Christmas1, with net switching gains for ten consecutive periods2

Six-week Christmas like-for-like sales increase of 6.8% includes growth of 9.2% in the four weeks to Christmas

Consistent volume growth across the period; particular strength in fresh food supported by market-leading availability

Now consistently the cheapest full-line grocer for over 14 months3; continuing to inflate less than all key competitors

Prices cut on nearly 2,700 products with savings of c.10%, alongside unrivalled value proposition of Aldi Price Match, Low Everyday Prices & Clubcard Prices; further 150 Price Cuts and double Clubcard points announced this week

Continued investment in innovation and quality with over 550 new and improved festive products, including the launch of our 'Finest Chef's Collection' festive food to order range; quality perception up +91bps YoY vs market decline4; won 35 Christmas food awards

Total Finest sales up 16.7% including a record Christmas sales week; continued net switching gains from premium retailers, now for 17 consecutive periods5

Clubcard sales penetration up further 3ppts YoY to 83%; issued 83m digital personalised coupons and launched a personalised 'Shop & Save' campaign rewarding customers with additional savings over Christmas

Online sales up 11.5%, supported by strong execution, with orders, volumes, pick rates and availability all up YoY; delivered nearly half a million Whoosh orders in lead up to Christmas

Over two million meals donated to foodbanks by customers and colleagues through our Winter Food Collection

https://www.investegate.co.uk/announcem ... 4-/7984398

Ian (I hold).

[idpickering]

Strategic partnership & sale of banking business

Tesco is delighted to announce a long-term strategic partnership with Barclays, one of the UK's leading banks. Initially for a 10-year period, the exclusive partnership will combine Tesco's market-leading brand, physical & digital reach and relentless customer focus with Barclays' deep financial services capabilities and expertise in commercial partnerships.

The partnership will allow us to offer customers Tesco-branded banking products and services, benefiting from the power of Tesco Clubcard, the UK's largest loyalty programme, in addition to exploring other opportunities to offer value to Tesco and Barclays customers. Under the terms of the agreement, we will receive annual income for the use of the Tesco brand, for growing the customer base through Tesco channels and as a result of Barclays' participation in the Tesco Clubcard programme.

https://www.investegate.co.uk/announcem ... ss/8029869

And: https://www.investegate.co.uk/announcem ... ss/8030125

Ian (I hold TSCO).

[EthicsGradient]

From the announcement:

Our existing banking operations in credit cards, loans and savings will be sold to Barclays, removing £7.7bn of capital-intensive assets and £6.7bn of financial liabilities from the Tesco balance sheeti. In return, we expect to receive c.£600m of proceeds, in addition to c.£100m further net cash after the settlement of certain regulatory capital amounts and after transaction costs. Combined with the previously announced special dividend of £250m paid by Tesco Bank in August 2023, this is expected to result in total cash received by Tesco of around £1bn. The majority of this cash will be returned to shareholders in the form of an incremental share buyback.

We will retain all other existing activities of Tesco Bank, including insurance, ATMs, travel money and gift cards. These are capital-light, profitable businesses with a strong connection to our core retail offer.

Combined, the pro forma annual adjusted operating profit from the partnership and retained activities is anticipated to be in the range of c.£80m to c.£100m - more than half of the current year expected profits from Tesco Bank.

Taking into account the benefit of the incremental share buyback, the combined effect of the sale of the banking operations and formation of the partnership is expected to be mildly accretive to earnings per share.

https://www.londonstockexchange.com/new ... s/16325180

[Laughton]

Not sure if I should have started a new thread but what I'm intrerested in is what impact this will have on the Tesco Credit Card.

I took one out a couple of years ago because I get Tesco points every time I use it (and double points if used when using it at Tesco). Nice little bit of help every now and again with money vouchers to be used against weekly shopping.

But I don't like some of the things they do, especially the fact that they direct debit my bank with the monthly balance on a date earlier than I have to pay if done manually. I'm also not madly keen on Barclays as a bank so no real interest in supporting them.

So, if no points then I intend cancelling my Tesco credit card and going back to alternative which I haven't used for a while.

[the0ni0nking]

Not sure if I should have started a new thread but what I'm intrerested in is what impact this will have on the Tesco Credit Card.

I took one out a couple of years ago because I get Tesco points every time I use it (and double points if used when using it at Tesco). Nice little bit of help every now and again with money vouchers to be used against weekly shopping.

But I don't like some of the things they do, especially the fact that they direct debit my bank with the monthly balance on a date earlier than I have to pay if done manually. I'm also not madly keen on Barclays as a bank so no real interest in supporting them.

So, if no points then I intend cancelling my Tesco credit card and going back to alternative which I haven't used for a while.

On the Tesco Bank website:

If you have a Tesco Bank Credit Card, Loan, Savings Account or Clubcard Pay+ account please be aware of the following:

There is no immediate impact on your account

The sale to Barclays is expected to take place in the second half of 2024

Any important changes will be communicated to you before then

Under the strategic partnership with Barclays, Tesco Bank customers will continue to earn Clubcard Points when you spend on a Tesco Bank Credit Card or Clubcard Pay

Tesco Bank Savings Accounts continue to be covered by the Financial Services Compensation Scheme


https://www.tescobank.com/tesco-bank-update/

[Laughton]

Ah. Many thanks for swift response. I did look but couldn't find that page.

[idpickering]

Tesco PLC Preliminary Results.

Strong sales performance across the Group, with Retail LFL8 sales up 6.8%; inflation fell throughout the year, with volume growth in the UK and Republic of Ireland across the second half

- UK & ROI LFL sales up 7.3%, including UK up 7.7%, ROI up 6.8% and Booker up 5.4%

- Central Europe LFL sales up 0.2% in a challenging trading environment, with our investments in value supporting an improving volume trajectory during the second half

· Statutory revenue £68,187m, up 4.4%, includes impact of (17.2)% lower fuel sales, primarily due to reduced retail prices

· Retail adjusted operating profit5 £2,760m, up 10.9% at constant rates, including Save to Invest delivery of c.£640m

- UK & ROI adjusted operating profit £2,670m, up 15.7%, as a strong trading performance and accelerated cost savings offset significant cost headwinds and our investments in value, quality and service

- Central Europe adjusted operating profit £90m, down (50.0)%, primarily driven by cost inflation headwinds and regulatory actions in Hungary

· Statutory operating profit1 £2,821m, up 100.1%, reflects last year's £(982)m non-cash impairment charge compared to a £28m net release this year

· Strong retail free cash flow6 £2,063m, including a positive working capital inflow of £418m

· Net debt6,7 reduced by £729m due to strong cash flow and Bank special dividend of £250m; net debt/EBITDA ratio at 2.2x

· Supporting returns to shareholders through ongoing buyback programme; £750m of shares purchased during 23/24

· Proposed final dividend of 8.25pps, with full year dividend of 12.10pps, up 11.0% year-on-year

And later;

The proposed final dividend was approved by the Board of Directors on 9 April 2024 and is subject to the approval of shareholders at the AGM. The proposed dividend has not been included as a liability as at 24 February 2024. It will be paid on 28 June 2024 to shareholders who are on the Register of members at close of business on 17 May 2024.

A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their dividends in the shares of the Company. For those shareholders electing to receive the DRIP, the last date for receipt of a new election is 7 June 2024.

https://www.investegate.co.uk/announcem ... ts/8129414

Ian (I hold).

[idpickering]

Commencement of Share Buyback Programme.

Further to the announcements made on 10 April 2024, Tesco PLC (the "Company") announces that it has entered into an arrangement with Citigroup Global Markets Limited ("Citi") to repurchase shares, together with any other ordinary shares in the Company (the "Shares") purchased on behalf of the Company (on a riskless principal basis) on the London Stock Exchange and/or Cboe Europe Limited through the BXE and CXE order books, and/or Turquoise. The first tranche of this buyback programme (the "Initial Programme") will be for an aggregate market value of up to £450m. Any further tranches of the buyback programme, which may be conducted after completion of the Initial Programme, will be announced in due course.

The arrangement allows Citi to purchase Shares on the Company's behalf (on a riskless principal basis) in accordance with the Company's current buyback authority granted by shareholders at the Company's 2023 Annual General Meeting and any subsequent authority and shall be made independently of and uninfluenced by the Company (including, for the avoidance of doubt, in the case of any purchases made during closed periods).

https://www.investegate.co.uk/announcem ... me/8148184

Ian (I hold).