How Tesco Has Fared During 2012

LONDON -- Tesco (LSE: TSCO.L  ) (NASDAQOTH: TSCDY.PK) has dropped 20% from its 2011 high of more than 400 pence to about 320 pence so far during 2012, making the share one of this year's disappointing performers in the FTSE 100. During the same time, the blue-chip index has gained 5% and generated a total return of 9%.

The U.K.'s biggest supermarket chain has had a tough time this year dealing with boardroom changes, embarrassing pricing glitches, and a slowdown in consumer spending. In April, Tesco's full-year results showed a small increase in underlying pre-tax profits for the group to 3.9 billion pounds. It lifted its dividend by 2% to 14.7 pence per share and also announced a 1 billion pound commitment to "Building a Better Tesco" for U.K. customers.

At the time, Philip Clarke, Tesco's newly appointed chief executive, said: 

While our International business is delivering excellent growth, contributing 1.1 billion pounds of profit to the Group, we fully recognise that we need to raise our game in the U.K. As a result, we are committing over 1 billion pounds to make the U.K. shopping trip better for customers: more staff giving improved service in-store; refreshed stores that are better and easier places to shop; lower prices and even more value from an improved product range. As we improve the shopping trip for our customers, it will follow that our sales growth and financial performance will improve too. … These are decisive steps and this cost investment -- as we have already announced -- will constrain our near-term profitability.

Then, in June, Tesco posted a solid Q1 in line with market expectations for the U.K. Internationally, like-for-like sales growth proved resilient despite slowing economic growth in China and the emerging impact of legislation that reduces shopping hours in South Korea.

In October, Tesco's half-year results reported its first fall in profits since 1994. Pre-tax profits for the six months to Aug. 25 were down 12% to 1.7 billion pounds. However, the interim dividend per share was held at 4.63 pence. Tesco's turnaround will take some time to bear fruit. But in the meantime, investors can take some comfort in the above-average 4.6% dividend yield.

If you are seeking blue-chip ideas for 2013 and beyond, "The FTSE 100 Share Warren Buffett Loves" is an exclusive Fool report that names the British blue-chip the legendary billionaire investor is backing today, as well as the investing logic behind his purchase. You can discover the potential winner Buffett favors right now by downloading this free report while it remains available.

Are you looking to profit from this uncertain economy? "10 Steps To Making A Million In The Market" is the very latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- it's free.

Further Motley Fool investment opportunities:

Sonia does not own shares in any of the companies mentioned. The Motley Fool owns shares in Tesco. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2092398, ~/Articles/ArticleHandler.aspx, 12/21/2014 6:33:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement