Tesco H1 numbers
It is difficult for companies and customers.
That’s the word from Tesco this morning as it produced its first half (H1) figures. The supermarket group led by Ken Murphy spoke about the environment in which it currently operates.
Adjusted operating profit was down 10% to £1.25 billion at constant exchange rates for the United Kingdom and the Republic of Ireland. Adjusted operating income is down 11.5%. You can see the weakness spreading here in both earnings and revenue.
But interestingly UK comparable sales were up and better than expected. It was only a small increase of 0.7%. Bloomberg had estimates of a slight decline for that period, but the company warned that due to strong inflationary pressures and consumer caution, annual earnings were likely to be at the lower end of its previous forecast.
Stock price chart
Let’s take a look at the stock price chart. I think that really says it all.
We saw this decline recently where we actually dipped below the low we set on October 27, 2020. And you can see now, in fact in the last few days, we’ve been trading at levels not seen since January 2019.
But as far as what’s happening today we initially saw the stock hit a one week high I guess based on what initially looked like relatively good numbers on the earnings numbers here at UK.
But when you factor in the rest of the picture and the caution the company has exercised over its outlook, the earlier guidance of between £2.4bn and £2.5bn for overall annual profit, the company stands is now heading towards the lower end of this range. . It paid a dividend up 20% to 3.85 pence, which was also a good thing. But I think overall the outlook here for Tesco is a bit weaker and I think that’s one of the reasons why after two hours of trading this morning the stock is down 2%, and that’s where we are.
But I think this line here at £202 or £2 per share will be key if you get a break, I think it could well open the door to new lower lows for the time being.
At least Tesco is holding its own, but that paints a bit of a gloomy picture for businesses and consumers alike.