Commentary on Tesco H1 2015

Julie Palmer, Partner at Begbies Traynor, said:

“Over a year has passed since Tesco’s £250m overstatement scandal hit the headlines and the Group is still struggling to see light at the end of the tunnel, having announced a 55% slump in profits to £354m from £779m last year. With a Serious Fraud Office investigation still casting its shadow, the unrelenting pressure on margins that discounters Aldi and Lidl continue to exert combined with the additional costs it faces from the National Living Wage, the group’s turnaround project still has a long journey ahead.

“Adjusting to the new normal of the supermarket industry, Tesco has been redoubling efforts to simplify its ranges and promotional offers, continuing to reinvest in its customer service and shifting commercial terms with suppliers from back to front margin. Tesco is now faced with the uncertain task of not only having to ameliorate its flat sales growth, but also win back investor’s trust. Disposals, store closures and cost cutting will only do so much for the beleaguered supermarket giant, and market insiders will now be questioning whether ‘Drastic Dave’ has been truly drastic enough.”