Future of tesco, morrisons

2010

Investors would normally pile in to a blue ribbon stock after such a startling decline, but as Garry White, chief investment commentator at Charles Stanley stockbrokers, says, some City investors are already referring to Tesco as a 'value trap' - a bargain stock that fails to perform.
Some reasons for the supermarket's dramatic fall from grace were outside the retailer's control, others less so.
The financial crisis and subsequent recession focused consumers' minds on value and led to the rise of discount chains - primarily Germany's Aldi and Lidl - at the expense of the established UK supermarkets, primarily Tesco.


http://www.bbc.co.uk/news/business-29310445

Steve_xx

2010 wrote: »

Originally Posted by 2010 increase sales and this can only be done by cutting prices which in turn cuts profits.




You`ll be eating your words when Tesco annouce shortly price cuts.
The way they have carried on ANYONE could have done better in charge.
They remind me very much of the time a certain Greek gentleman came along with a couple of planes and everyone, mainly BA dismissed him.
They did what Tesco has been doing about Aldi and Lidl, namely they buried their head in the sand and took their eye off the ball.
Next big annoucement from Tesco

---

price cuts, they have no choice

now 194-80p

How will price cuts fix this company?

Steve_xx

2010 wrote: »

Investors would normally pile in to a blue ribbon stock after such a startling decline, but as Garry White, chief investment commentator at Charles Stanley stockbrokers, says, some City investors are already referring to Tesco as a 'value trap' - a bargain stock that fails to perform.
Some reasons for the supermarket's dramatic fall from grace were outside the retailer's control, others less so.
The financial crisis and subsequent recession focused consumers' minds on value and led to the rise of discount chains - primarily Germany's Aldi and Lidl - at the expense of the established UK supermarkets, primarily Tesco.


http://www.bbc.co.uk/news/business-29310445

Commentators say all sorts of things about companies. Then the day after they say something else.


Stock prices fall sharply on bad news and often they recover. You don't seriously believe that Tesco is a gonner? Because if they are then why wouldn't Sainsbury, Morrison and Asda be in the same boat?


Also, do consider that if the share price drops sharply enough then it's likely that some johnny foreigner consortium may want to bid for it. What effect do you think that would have on the share price?

IronWolf

2010 wrote: »

Originally Posted by 2010 increase sales and this can only be done by cutting prices which in turn cuts profits.




You`ll be eating your words when Tesco annouce shortly price cuts.
The way they have carried on ANYONE could have done better in charge.
They remind me very much of the time a certain Greek gentleman came along with a couple of planes and everyone, mainly BA dismissed him.
They did what Tesco has been doing about Aldi and Lidl, namely they buried their head in the sand and took their eye off the ball.
Next big annoucement from Tesco

---

price cuts, they have no choice

now 194-80p

Tesco's problem is much bigger than price. As has been shown on other threads, Tesco on many items isn't more expensive than Aldi. Tesco's problem is Aldi is perceived to be cheaper.

And cutting prices doesn't lead to increased sales, as Tesco has learnt over the last couple of years. If you cut prices by 1% then your sales will decline 1% unless the number of customers increases.

Cutting prices is not the only way to increase sales, there are many other and better ways a good management can use. Cutting prices is usually the last resort.

2010

Maybe for a start they should abandon their clubcard points and use that money to cut prices.
Asda were very wise in not going down the points (old green sheild stamps) route and decided to keep their prices lower by doing so.

Every time Tesco brings out a sales update the shares will fall back.
The city only want to hear about sales growth, profit growth and that`s not going to happen for years.

Glen_Clark

2010 wrote: »

You`ll be eating your words when Tesco annouce shortly price cuts.

:rotfl:Well they won't be announcing their price rises thats for sure.
When did shops do anything other than announce price cuts?
They have all announced so many price cuts they must be giving the stuff away by now .....
PS: seriously look at their net profit margins then ask yourself how they can cut prices

2010

Steve_xx wrote: »

How will price cuts fix this company?

I didn`t say they would.
What I said in post # 261 was,

The only way to increase the share price is to increase sales and this can only be done by cutting prices which in turn cuts profits.

They`re in a catch 22.

2010

Glen_Clark wrote: »

PS: seriously look at their net profit margins then ask yourself how they can cut prices

See post #276

Steve_xx

2010 wrote: »

I didn`t say they would.
What I said in post # 261 was,

The only way to increase the share price is to increase sales and this can only be done by cutting prices which in turn cuts profits.

They`re in a catch 22.

You implied that cutting prices would fix it.


They're not in a catch 22, they're in spate of bad news that they will emerge from.


You are obsessed with price cutting initiatives. Have you not heard of the term "dutch auction"?

Steve_xx

Glen_Clark wrote: »

:rotfl:Well they won't be announcing their price rises thats for sure.
When did shops do anything other than announce price cuts?
They have all announced so many price cuts they must be giving the stuff away by now .....
PS: seriously look at their net profit margins then ask yourself how they can cut prices

They may well announce some price cuts, but for every one they cut you can be sure that they'll hike another one elsewhere.