Future of tesco, morrisons

yatinsardana

Where do you think these companies are heading in the future? Tough tough sector to be in for them with such fierce competition.

Of the two, I feel morrisons at the moment have a better, more focused plan to retaining their market share albeit at the expense of losing margin. I don't think tesco's £200m attempt to cut prices will be enough (or at least that's what it seems like). It's an interesting period for the two of them in the long term. They may have to start selling off some of their huge stores that aren't making much money.

Tesco is having a good time outside UK but 2/3 revenues are from within UK where they're losing market share.

My own opinion is such that the yield on both is brilliant. Good to see that tesco isn't cutting down on dividends. At the moment, a good yield will be my only reason to buy as I think the future of both these companies is uncertain. I would want to wait and see where they're heading before making up my mind on whether or not I think they're good companies to have in your portfolio. By that time, I'm sure the yield would be lower.

Borrowedtune

The European discounters have very aggressive expansion plans for the UK, considerably in excess of what has been announced publicly.


Things will get a lot worse for the likes of Tesco before they get any better, at least in the UK market.

Ifts

In case you missed this thread from earlier on today (now on page 2): Tesco shares...

yatinsardana

Ifts wrote: »

In case you missed this thread from earlier on today (now on page 2): Tesco shares...

I completely missed it, thanks. We shall continue discussions there.

ChesterDog

A good yield is all very well, but if the share price continues to fall you will be out of pocket unless things pick up longterm and you are still holding.

For what it's worth (not much - I don't claim any sort of expertise, but sometimes it helps to see others' thinking, I know), I sold my holdings of both recently. Seems to me like both are destined for a pretty tough period indefinitely.

Scarpacci

Morrisons looks attractive as a share, more than a company, but I just can't get behind a supermarket so late to the game on convenience stores and online shopping. The time when the Morrisons' no-nonsense old-fashioned Yorkshire attitude, which kept them out of all these newfangled big city inventions of conveniences stores and t'Internet, made some sense was about decade ago. Maybe they'll catch up or this won't be as important an area as it appears, but I think it left them the weakest of the big four even before the competition from Germany turned up.

Glen_Clark

Scarpacci wrote: »

online shopping. The time when the Morrisons' no-nonsense old-fashioned Yorkshire attitude, which kept them out of all these newfangled big city inventions of conveniences stores and t'Internet, made some sense was about decade ago. Maybe they'll catch up or this won't be as important an area as it appears, but I think it left them the weakest of the big four even before the competition from Germany turned up.

So how much profit is there in online grocery shopping?

2010

After building massive superstores on the outskirts of towns, they now find most people want to shop online and for their odds and ends nip into their local convenience shop.
Morrisons are very late on the scene and having to pay top dollar for thier high st. stores and should have around 100 by the end of the year.
Tesco have already got one thousand seven hundred convenience stores.
Morrison`s share price has lost one third in less than a year from 300p to 200p.
Fierce competition from Aldi and Lidl, who don`t have high overhead and staff costs are having a big effect as shoppers switch to them.
Out the two I would go for Tesco.
Better still avoid the sector.

A_Flock_Of_Sheep

In my earlier reckless investing days I had some tesco shares.

Glad I dumped them.

However, if I could get some Aldi and Lidl shares I would consider them a sound investment.

yatinsardana

Are Aldi and Lidl publicly traded?
Tesco are clearly in a better financial position than morrisons but I feel they're not managed with a concrete plan just yet - maybe they will be in the future.

I agree with the majority of the posts here and on the other forum that in general it's a sector you want to be away from for the moment. It'll be a long road for both of them with no defined end product. Like I mentioned before, I'd probably wait and watch. Not comfortable with buying either right now but maybe wait a while to see how the market continues to respond to the developments.

Thanks everyone

Scarpacci

Glen_Clark wrote: »

So how much profit is there in online grocery shopping?

Tesco reportedly made £127m profit online last year. Tesco's UK profit is £2,191m, so online is still only a small part and is less profitable than Tesco Bank (£194m). Still, Tesco reported 11% growth in UK online in their latest results. For a segment many people believed was losing money, £127m profit seems relatively impressive. Sainsbury's & ASDA haven't revealed their online profit, while Ocado has yet to turn in a profit.

£127m figure: http://www.independent.co.uk/news/business/news/tesco-who-says-its-hard-to-make-home-delivery-profits-9153185.html
Online growth & Tesco Bank profits from Tesco's latest results: http://www.tescoplc.com/index.asp?pageid=17&newsid=954