winkie Posted December 9, 2014 Share Posted December 9, 2014 Waitrose seems to be doing ok though. Waitrose value their staff suppliers and customers......tesco doesn't, or hasn't shown to do so in the recent past. Waitrose stores tend to be in wealthier areas....older wealthier people eat less, so can afford to spend more on less......growing young working families do not tend to shop in Waitrose, they will go where the prices and value are right......others may shop for value but buy certain other items in a local specialist stores or pop into Waitrose for a special treat. Quote Link to comment Share on other sites More sharing options...
SarahBell Posted December 9, 2014 Share Posted December 9, 2014 The food shopping market has changed considerably in the UK. It is not just Lidl and Aldi - it is all the other shops such as Home Bargains, B&M, etc, etc, who now are selling many of the products that the big 3 have got away with charging a premium for years. Home bargains is a delight! All those top brand toothpastes for a good couple of quid cheaper than the supermarkets! Tons of food too! Veg even in the home bargains at Ashton! Quote Link to comment Share on other sites More sharing options...
Errol Posted December 9, 2014 Share Posted December 9, 2014 If you think Tesco will survive, then surely this has got to be a buy at some point. Quote Link to comment Share on other sites More sharing options...
council dweller Posted December 9, 2014 Share Posted December 9, 2014 TESCO will breakup within the next 2 years if their sales continue to fall. They are in too weak a position to cut their prices now, that should have been done 4 or 5 years ago. Stores will close starting with unprofitable stores and those not owned by Tesco. Quote Link to comment Share on other sites More sharing options...
R K Posted December 9, 2014 Share Posted December 9, 2014 Kamal Ahmed @bbckamal 16m16 minutes ago Moody's warns on Tesco: "Significantly lower trading profit will further increase negative pressure on its current rating." Quote Link to comment Share on other sites More sharing options...
Killer Bunny Posted December 9, 2014 Share Posted December 9, 2014 Yes they said the same of M&S. No way on Earth TESCO going to the wall. Smaller and more agile, sure. Cheap at these levels. Can of course go more cheap but doesn'tstop being cheap now. If £5m PCL went to £2m it would still be ridiculous but it would be cheap. Quote Link to comment Share on other sites More sharing options...
durhamborn Posted December 9, 2014 Share Posted December 9, 2014 Yes they said the same of M&S. No way on Earth TESCO going to the wall. Smaller and more agile, sure. Cheap at these levels. Can of course go more cheap but doesn'tstop being cheap now. If £5m PCL went to £2m it would still be ridiculous but it would be cheap. Why cant it?.Its balance sheet is a disaster.Most of its stores are on long lease,even ones boarded up they have just built.Its pensions deficit is huge.Its margins are now at 1.5% in the UK yet they still cant get anywhere near Aldi,Lidl or even Morrisons and Asda on price. The one saving might be the fact they can pull massive amounts of CAPEX ,but the balance sheet looks roughly free cashflow neutral to me with a small dividend. Much more sales decline and they will turn negative cash flow on a balance sheet with little real assets against massive debts and lease liabilities. Their huge stores are a massive liability, but they cant close them due to lease terms.Most have between 10 and 20 years to run. Almost certain they will break up the company before all shareholder value is destroyed.Buying them would be taking a risk they can sell assets and release value before its destroyed. Not sure even if the UK business is profitable going forward. Quote Link to comment Share on other sites More sharing options...
thecrashingisles Posted December 9, 2014 Share Posted December 9, 2014 What strikes me in many stores now, not just tesco, are the boxes of own brand stuff are sold out and the branded stuff next to it is sitting there unsold. They need to retrain the shelf-stackers to use a feather duster. Quote Link to comment Share on other sites More sharing options...
gf3 Posted December 9, 2014 Share Posted December 9, 2014 What strikes me in many stores now, not just tesco, are the boxes of own brand stuff are sold out and the branded stuff next to it is sitting there unsold. Funny enough just seen that with cat food. bought the last box of their own brand would have bought 3 boxes. Quote Link to comment Share on other sites More sharing options...
council dweller Posted December 9, 2014 Share Posted December 9, 2014 Aldi is better for cat food I find. 20p a day on average. Loves to climb the xmas tree.... Quote Link to comment Share on other sites More sharing options...
Wurzel Of Highbridge Posted December 9, 2014 Share Posted December 9, 2014 Why cant it?.Its balance sheet is a disaster.Most of its stores are on long lease,even ones boarded up they have just built.Its pensions deficit is huge.Its margins are now at 1.5% in the UK yet they still cant get anywhere near Aldi,Lidl or even Morrisons and Asda on price. The one saving might be the fact they can pull massive amounts of CAPEX ,but the balance sheet looks roughly free cashflow neutral to me with a small dividend. Much more sales decline and they will turn negative cash flow on a balance sheet with little real assets against massive debts and lease liabilities. Their huge stores are a massive liability, but they cant close them due to lease terms.Most have between 10 and 20 years to run. Almost certain they will break up the company before all shareholder value is destroyed.Buying them would be taking a risk they can sell assets and release value before its destroyed. Not sure even if the UK business is profitable going forward. If things get really bad, they can always downsize the floor space and lease some space. They effectively become a medium store and landlord of 1/2 dozen smaller units within. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted December 9, 2014 Share Posted December 9, 2014 If things get really bad, they can always downsize the floor space and lease some space. They effectively become a medium store and landlord of 1/2 dozen smaller units within. Like a retail HMO daddy. Quote Link to comment Share on other sites More sharing options...
Ash4781 Posted December 9, 2014 Share Posted December 9, 2014 One for the textbooks. Do the ratings agencies mention a rights issue ? If one visits the store they aren't cutting prices. As other posters mention the balance sheet stops them doing this. What would not look good ( for UK PLc) is them blowing up in an uncontrolled way Woolworths style. Quote Link to comment Share on other sites More sharing options...
stepho Posted December 9, 2014 Share Posted December 9, 2014 If things get really bad, they can always downsize the floor space and lease some space. They effectively become a medium store and landlord of 1/2 dozen smaller units within. Selling what though? Stores big enough already have a cafe, dry cleaners, cobbler/key cutter, mobile store and pharmacy - they also sell electrical items, clothes and home wares etc.. Can't think of anything else that would be suitable or not compete. Even by not selling those and allowing others in, it's not looking like a successful model. Perhaps an in store foxtons concession? Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted December 9, 2014 Share Posted December 9, 2014 Selling what though? Stores big enough already have a cafe, dry cleaners, cobbler/key cutter, mobile store and pharmacy - they also sell electrical items, clothes and home wares etc.. Can't think of anything else that would be suitable or not compete. Even by not selling those and allowing others in, it's not looking like a successful model. Perhaps an in store foxtons concession? Estate agents? Quote Link to comment Share on other sites More sharing options...
mrtickle Posted December 9, 2014 Share Posted December 9, 2014 If things get really bad, they can always downsize the floor space and lease some space. They effectively become a medium store and landlord of 1/2 dozen smaller units within. Like Morrison's? Quote Link to comment Share on other sites More sharing options...
frozen_out Posted December 9, 2014 Share Posted December 9, 2014 Selling what though? Stores big enough already have a cafe, dry cleaners, cobbler/key cutter, mobile store and pharmacy - they also sell electrical items, clothes and home wares etc.. Can't think of anything else that would be suitable or not compete. Even by not selling those and allowing others in, it's not looking like a successful model. Perhaps an in store foxtons concession? Stockton has a gym. Quote Link to comment Share on other sites More sharing options...
mrtickle Posted December 9, 2014 Share Posted December 9, 2014 (edited) Stockton has a gym. They could have a hospital, a school, or sell guns. As predicted by Fry and Laurie years ago! (about Marks and Spencer, but let's not split hairs!) Edited December 9, 2014 by mrtickle Quote Link to comment Share on other sites More sharing options...
R K Posted December 9, 2014 Share Posted December 9, 2014 Citeh is exceedingly good at financial crime, benchmark rigging, fraudulent mis-selling, transfer of losses to innocent 3rd parties and so on..... Germans can't touch dis Quote Link to comment Share on other sites More sharing options...
Sancho Panza Posted December 10, 2014 Author Share Posted December 10, 2014 Why cant it?.Its balance sheet is a disaster.Most of its stores are on long lease,even ones boarded up they have just built.Its pensions deficit is huge.Its margins are now at 1.5% in the UK yet they still cant get anywhere near Aldi,Lidl or even Morrisons and Asda on price. The one saving might be the fact they can pull massive amounts of CAPEX ,but the balance sheet looks roughly free cashflow neutral to me with a small dividend. Much more sales decline and they will turn negative cash flow on a balance sheet with little real assets against massive debts and lease liabilities. Their huge stores are a massive liability, but they cant close them due to lease terms.Most have between 10 and 20 years to run. Almost certain they will break up the company before all shareholder value is destroyed.Buying them would be taking a risk they can sell assets and release value before its destroyed. Not sure even if the UK business is profitable going forward. I think someone mentioned earlier in the thread that as their balance sheet deteriorates,trade credit insurance and factoring costs for suppliers could go up,alongside a hike in Tescos borrowing costs/terms. If you were going to dabble in 'cheap' supermarket shares,Sainsburys and Morrisons seem a better bet. Quote Link to comment Share on other sites More sharing options...
Northerner Posted December 10, 2014 Share Posted December 10, 2014 Quite. If we can't be a better 'nation of shopkeepers' than the Germans, what on earth can we be better than them at? "Football is a simple game - 22 men chase a ball for 90 minutes and, at the end, the Germans win." Not every time ... Quote Link to comment Share on other sites More sharing options...
Sancho Panza Posted December 10, 2014 Author Share Posted December 10, 2014 http://www.telegraph.co.uk/finance/markets/questor/11283716/Sell-Tesco-there-is-more-pain-to-come.html 'Sell Tesco there is more pain to come Tesco has high debt levels, falling profits, a shaky balance sheet and is facing a credit downgrade which combined mean the shares have further to fall, says Questor nvestors out looking for a pre-Christmas bargain should steer well clear of Tesco shares [LON:TSCO]. Yesterday, the supermarket giant issued its fifth profit warning this year, wiping more than 6pc off the share price. Tesco’s shares have now halved since the start of the year, but now is not the time to be buying as there are bigger problems lurking in the aisles. The first problem facing Tesco could be huge property write-downs. The supermarket sector spent billions of pounds opening new out-of-town stores in an era dubbed the “space race”. The goal was market share and Tesco won by some distance, controlling 31.7pc of the grocery market, or one pound in every seven spent in UK shops, at its peak in 2007. The problem for Tesco was that the UK is a small island with a stable population and its investors demanded continued growth. The retailer decided to take over the high street with convenience stores. But this caused consumers to switch from a big weekly shop at the out-of-town retail park to smaller top-up shops. The fall in disposable income from 2008 onwards exacerbated the transition to buying fewer items more often to manage household cash. The interesting thing about supermarkets is that each site is only profitable at the margin. For example, to cover the heating, lighting, staffing and fresh food costs they might need to be 80pc full with shoppers to hit break even point. Tesco only need tempt in a small portion of the UKs shoppers to get it to 81pc full and it is profitable; small movements in shopping numbers matter a great deal to supermarkets profits. So when Tesco sales dropped by 3.6pc in the 12 weeks to October 12, reducing its market share to 28.8pc, according to Kantar Worldpanel, that is the reason for the flurry of profit warnings. And if you own a huge amount of retail space that is no longer covering its costs the value of that property needs adjusting. The biggest asset on the balance sheet at Tesco is the recently reported £24.5bn in property, plant and equipment. If Tesco follows rival Sainsbury’s and writes down the value of its property next April the number could be huge. The shares have a notional price floor at about 181p, based on a balance sheet net asset value of £14.7bn. The second nasty surprise is hidden off the balance sheet. During the boom years the company supported big dividend payments through selling off bits of its store portfolio, through something called a sale and leaseback, where the building is sold and rented back. Tesco had £15.9bn in operating lease commitments as of last February. This is fine as long as the store remains profitable, but if it becomes loss-making the lease can become an albatross around a retailer’s neck. The rent Tesco pays may be locked in at well above the current market rate, so rivals can open space more cheaply and offer better prices. The lease contract can also prove very expensive to exit. The third problem is that with falling profits, cash flow will get tighter this year. As a guide, Tesco paid about £300m in interest payments last year, but since then net debt has increased by £1bn to £7.5bn at the end of August, and the credit rating is heading towards junk status, leaving the balance sheet of one of Britain’s biggest retailers looking incredibly stretched. It has net debt of £7.5bn, a pension deficit of £4.2bn against shareholders equity of £13.4bn at the end of August, as well as off lease liabilities of about £15.9bn. Despite falling 52pc from our initial advice (Sell, 358p, October 2, 2013), Questor thinks Tesco shares look incredibly risky and is more than happy to leave this bargain on the shelf for the meantime. Sell.' Quote Link to comment Share on other sites More sharing options...
Billy soy Posted December 10, 2014 Share Posted December 10, 2014 http://www.telegraph.co.uk/finance/markets/questor/11283716/Sell-Tesco-there-is-more-pain-to-come.html 'Sell Tesco there is more pain to come Tesco has high debt levels, falling profits, a shaky balance sheet and is facing a credit downgrade which combined mean the shares have further to fall, says Questor nvestors out looking for a pre-Christmas bargain should steer well clear of Tesco shares [LON:TSCO]. Yesterday, the supermarket giant issued its fifth profit warning this year, wiping more than 6pc off the share price. Tescos shares have now halved since the start of the year, but now is not the time to be buying as there are bigger problems lurking in the aisles. The first problem facing Tesco could be huge property write-downs. The supermarket sector spent billions of pounds opening new out-of-town stores in an era dubbed the space race. The goal was market share and Tesco won by some distance, controlling 31.7pc of the grocery market, or one pound in every seven spent in UK shops, at its peak in 2007. The problem for Tesco was that the UK is a small island with a stable population and its investors demanded continued growth. The retailer decided to take over the high street with convenience stores. But this caused consumers to switch from a big weekly shop at the out-of-town retail park to smaller top-up shops. The fall in disposable income from 2008 onwards exacerbated the transition to buying fewer items more often to manage household cash. The interesting thing about supermarkets is that each site is only profitable at the margin. For example, to cover the heating, lighting, staffing and fresh food costs they might need to be 80pc full with shoppers to hit break even point. Tesco only need tempt in a small portion of the UKs shoppers to get it to 81pc full and it is profitable; small movements in shopping numbers matter a great deal to supermarkets profits. So when Tesco sales dropped by 3.6pc in the 12 weeks to October 12, reducing its market share to 28.8pc, according to Kantar Worldpanel, that is the reason for the flurry of profit warnings. And if you own a huge amount of retail space that is no longer covering its costs the value of that property needs adjusting. The biggest asset on the balance sheet at Tesco is the recently reported £24.5bn in property, plant and equipment. If Tesco follows rival Sainsburys and writes down the value of its property next April the number could be huge. The shares have a notional price floor at about 181p, based on a balance sheet net asset value of £14.7bn. The second nasty surprise is hidden off the balance sheet. During the boom years the company supported big dividend payments through selling off bits of its store portfolio, through something called a sale and leaseback, where the building is sold and rented back. Tesco had £15.9bn in operating lease commitments as of last February. This is fine as long as the store remains profitable, but if it becomes loss-making the lease can become an albatross around a retailers neck. The rent Tesco pays may be locked in at well above the current market rate, so rivals can open space more cheaply and offer better prices. The lease contract can also prove very expensive to exit. The third problem is that with falling profits, cash flow will get tighter this year. As a guide, Tesco paid about £300m in interest payments last year, but since then net debt has increased by £1bn to £7.5bn at the end of August, and the credit rating is heading towards junk status, leaving the balance sheet of one of Britains biggest retailers looking incredibly stretched. It has net debt of £7.5bn, a pension deficit of £4.2bn against shareholders equity of £13.4bn at the end of August, as well as off lease liabilities of about £15.9bn. Despite falling 52pc from our initial advice (Sell, 358p, October 2, 2013), Questor thinks Tesco shares look incredibly risky and is more than happy to leave this bargain on the shelf for the meantime. Sell.' Well, it looks like tescos are not long for this world then. Quote Link to comment Share on other sites More sharing options...
Wurzel Of Highbridge Posted December 10, 2014 Share Posted December 10, 2014 A buyout by Carrefour/Auchan and debt write down would be a good result for all involved (except for the banks). I often wonder why Tesco never opened any Hypermarkets like they have in Europe, must be that land cost is too high? I find that Tescos larger stores do not stock any more variety than small/mid size Tesco stores. Tesco smacks of typical UK mismanagement where you can't sell anything without XYZ margin, regardless of if it brings in the punters. I wen to Tesco last week, they are still peddling the non-offers Dr.Oaker Piazza's were £3.99 now £1.50, where you can buy them in FarmFoods all year around for £1. And it's not just the prices, if it was nice to shop in Tesco people would go and pay for their overpriced produce. When I visited Carrefour hypermarket in Calais the other week it wasn't about the prices but about the range and quality of produce. It's always shocking getting back to the UK after holiday and seeing the shocking fresh vegetable/fish/meat/anything selection here in the UK. Quote Link to comment Share on other sites More sharing options...
Saving For a Space Ship Posted December 10, 2014 Share Posted December 10, 2014 Stockton has a gym. brothel ? Quote Link to comment Share on other sites More sharing options...
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