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Is anyone able to explain to me why Tesco posting a profit of £3.8Bn is considered a good thing by anyone except shareholders?

The news readers sound like their team won a cup or something.

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Is anyone able to explain to me why Tesco posting a profit of £3.8Bn is considered a good thing by anyone except shareholders?

The news readers sound like their team won a cup or something.

Profits = corporation tax

Corporation tax = a drop in the ocean in filling the debt/deficit?

Except Tesco uses dodgy tax evasion techniques therefore profits of 3.8bn will yield the sum of sod all CT.

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http://uk.finance.yahoo.com/news/Tesco-Smashes-Annual-Profits-skynews-3662036403.html?x=0

Tesco (LSE: TSCO.L - news) has announced record annual profit figures thanks to a booming trading market in Asia.

Britain's biggest supermarket chain delivered £3.8bn in profit against £3.4bn a year ago.

Tesco's total sales were up 8.1% to £67.6bn.

It was its Asian market which helped push up numbers; trading in the region grew by nearly 30%

Nice growth in Asia. According to the article Tesco has 285,000 people employed in the UK. And from wikipedia it says they have 400,000 globally(including the UK).

£3.8 billion profits on 400k workers is not bad.. about £10,000 per worker. On the other hand a 5.6% profit margin doesn't seem that great to me. Maybe in retail that is good though.

I'm a fanboy of the big box stores though.. because they are bringing industrial scale productivity gains to retail. Like what happened many decades ago for manufacturing.

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I'm a fanboy of the big box stores though.. because they are bringing industrial scale productivity gains to retail. Like what happened many decades ago for manufacturing.

However, they surely then act to drive down local wealth. Not sure what the average wages are at a tesco store, but surely the 100 odd local businesses it replaces would have had a higher median take home, better propects in life as well as more people having the satisfaction of being their own bosses instead of worker drones with little or no aspiration to suceed, and no real role models in how to run their own small business, let alone being able to see an opportunity to open one?

Or am I mistaken?

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However, they surely then act to drive down local wealth. Not sure what the average wages are at a tesco store, but surely the 100 odd local businesses it replaces would have had a higher median take home, better propects in life as well as more people having the satisfaction of being their own bosses instead of worker drones with little or no aspiration to suceed, and no real role models in how to run their own small business, let alone being able to see an opportunity to open one?

Or am I mistaken?

Ages ago (i.e. when I left high school) Tesco was the place to work for (I grew up in a very iffy area) they used to pay £6-£7 an hour (for 1998 this was a lot) and barely anybody bar Adrian and Kyle got jobs with them. Everybody else went to Kwik Save Morrisons or ASDA.

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Is anyone able to explain to me why Tesco posting a profit of £3.8Bn is considered a good thing by anyone except shareholders?

The news readers sound like their team won a cup or something.

A UK company bringing in lots of profit from overseas is exactly what we need more of.

Well done Tesco I say.

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Tescos is a success story and there international expansion is something many have tried and failed at.

Well done them, my only concern is domination, no one wants to see a Market dominated by only one supermarket.

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Funny. Was just talking about this at home this morning. Back in the early 90s I worked at Tesco, my colleagues there were pretty normal working people, nobody expects to drive a Porsche on a Tesco wage, but I remember one woman with 3 kids (husband worked for the council on the roads - so no great wages either). They had a nice house (their own) and every year spent 2 week's in Majorca.

Anyone in that situation now will be struggling to get by and receiving tax credits and the like.

At least the shareholders are happy and the government is subsidising the wages.

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However, they surely then act to drive down local wealth. Not sure what the average wages are at a tesco store, but surely the 100 odd local businesses it replaces would have had a higher median take home, better propects in life as well as more people having the satisfaction of being their own bosses instead of worker drones with little or no aspiration to suceed, and no real role models in how to run their own small business, let alone being able to see an opportunity to open one?

Or am I mistaken?

I suspect you are right - those 100 odd local businesses they replaced (as you put it) would have kept more money circulating in the local economy instead of being leached away to Cheshunt, Herts..... Does anyone have any figures on this.... Is this like the multiplier effect in reverse to a local economy?

Where i live, a relatively prosperous area on paper compared to some, most of the money spent in the town just disappears into the black hole that is Sainsbury and Tesco and apart from their initial investment they do nothing for the greater good of the town....

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http://uk.finance.ya...036403.html?x=0

I'm a fanboy of the big box stores though.. because they are bringing industrial scale productivity gains to retail. Like what happened many decades ago for manufacturing.

How come my local "farm" shop can undercut many of the big box retail on price then, and offer better quality in many cases?Having said that though, I am probably wrong as I'm unfairly comparing with Sainsbury's Local which seem to try it on, and work on the "one born every minute" principle.

Edited by Sir John Steed

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Tescos is a success story and there international expansion is something many have tried and failed at.

Well done them, my only concern is domination, no one wants to see a Market dominated by only one supermarket.

So it's a good thing our supermarket sector remains intensely competitive.

Those of us in our forties (or thirties, if your parents took you shopping) and upwards remember a time when Tesco was a little also-ran supermarket in the same bracket as Kwik Save. A long way downmarket from where Lidl is today, and no competition for the likes of Sainsburys, or the (foreign-owned) Safeway. They've risen to their present position by turning themselves into very firmly The Best.

Locally to here we have three supermarkets: a Morrisons, a Coop, and a Lidl. I'd love it if we had a Tescos in place of any one of them.

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PROFITS

Group: £3.53bn - group pre-tax profits (+11.3pc)

Asia: £570m - trading profit (+29.5pc)

Europe: £527m - trading profit (+11.2pc)

US: £186m - trading loss (-12.7pc)

REVENUE (excluding VAT)

Group - £60.9bn (+7.1pc)

UK £40.8bn (+4pc)

Asia: £11bn (+21.5pc)

Europe: £10.5bn (+5.6pc)

US: £502m (+41.8pc)

LIKE-FOR-LIKE

UK - 0pc (sales)

Asia: 2.3pc (growth)

Europe: 2.6pc (growth)

US: 9.4pc (growth)

EMPLOYEES

Worldwide: 472,000

UK: 287,669

China: 22,668

Asia: 94,241

Continental Europe: 86,576

US: 3,246

STORES

Worldwide: 5,008

China: 88

UK: 2,482

Asia: 1,230

Continental Europe: 953

US: 145

MARKETS

How many: 14

Where: China, Czech Republic, Hungary, India, Japan, Malaysia, Poland, Republic of Ireland, Slovakia, South Korea, Thailand, Turkey, UK, US

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How come my local "farm" shop can undercut many of the big box retail on price then, and offer better quality in many cases?Having said that though, I am probably wrong as I'm unfairly comparing with Sainsbury's Local which seem to try it on, and work on the "one born every minute" principle.

What Injin said, the farm shop has lower overheads and less rentiers sucking at its teet.

Tesco has to pay horrendous biz rates (small restaurant I worked in which was located in a back street charged £150ish per sq metre as prime retail space). Your farm shop doesn't.

The place where I sometimes buy eggs sells eggs fairly cheaply because I know he hasn't got a licence to sell, I know he pays no biz rates and deos not declare it to the tax man.

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How come my local "farm" shop can undercut many of the big box retail on price then, and offer better quality in many cases?Having said that though, I am probably wrong as I'm unfairly comparing with Sainsbury's Local which seem to try it on, and work on the "one born every minute" principle.

I expect your local farm shop is competing (and doing a good job of it) in a niche. Which is what smaller shops need to do, and can do very effectively.

Probably also helped by a tax regime that's much more lenient than what the big retailers face, and a whole lot less red tape in areas like food hygiene regulations.

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I can't see much threat to Tesco's dominance. I also think it's practically impossible for them not to increase profits each year - they can reduce costs further (given their huge purchasing power), or/and increase prices by such a fraction it's barely noticeable (given the sheer scale of the number of items they sell).

I think their risk is in over-expansion, feeding the beast as it were.

Edited by Reck B

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They've obviously increased profit by raising prices and reducing the number of staff.

The problem is that there are limits to this. If staff levels are decreased further , shelves will not be filled and large stores will only have one security guard working at night for example.

Raising prices? Many people now have no disposable income and many more will find their disposable income disappearing over the next year. It's one of those end game thingies....

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Is anyone able to explain to me why Tesco posting a profit of £3.8Bn is considered a good thing by anyone except shareholders?

The news readers sound like their team won a cup or something.

Can somebody explain to me why a football team winning a cup is considered a good thing by anyone except shareholders?

Surely, one of the key functions in sport is to build irrational attitudes of partisanship in spectators, ie training in irrational jingoism.

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EMPLOYEES

Worldwide: 472,000

UK: 287,669

China: 22,668

Asia: 94,241

Continental Europe: 86,576

US: 3,246

STORES

Worldwide: 5,008

China: 88

UK: 2,482

Asia: 1,230

Continental Europe: 953

US: 145

88 stores in China, with 22,648 employees.

145 stores in the US, with 3,246 employees.

Are the China stores the size of small towns?

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However, they surely then act to drive down local wealth. Not sure what the average wages are at a tesco store, but surely the 100 odd local businesses it replaces would have had a higher median take home, better propects in life as well as more people having the satisfaction of being their own bosses instead of worker drones with little or no aspiration to suceed, and no real role models in how to run their own small business, let alone being able to see an opportunity to open one?

Or am I mistaken?

Very good points. Moving towards mega scale does as you say make most people low end worker drones, instead of proprietors. Like manufacturing, over time Tescos will employ less and less staff relative to turnover.

It also made me think it must have been the same when manufacturing went to the mega scale. Like instead of a local guy making chairs for you by hand, it was made in some centralized factory somewhere in the country. The money you sent there no longer circulated in the local economy. The only way around that was to get some centralized factories in your locale.

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“Tesco never get to the point where they generate cash,” said Mitchell. “At the end of every year, they have more debt than they did at the start because there’s always new markets to invest in. I used to be a big fan, but there is a lot to be concerned about.”

From http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acjfPxUl3Bd8

I recall reading that each year the total debt would increase by more than the total profit they made that year. i.e. they would be better off just borrowing the money and sticking it straight in the bank to be treated as margin.

Anyone up for a Ponzi business model. (OK part Ponz). Hey guess what they are expecting to do soon: originating mortgages. OKAY!!!

Looks like the start of a leverage spiral to keep those debt repayments at bay...for today at any rate.

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Interesting. I read that due to the poor UK sales they'll be branching out into more areas. This was seen as bad news for other UK retailers. Margins again.

I hear they moved into second hand cars...

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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