Tesco’s Share Price Drops on Concerns of Q1 Sales Fall

Tesco’s share price (LON:TSCO) closed 0.25 percent lower at ₤3.5755 yesterday, June 3rd, as analysts voiced fears that the grocer would post a drop in like-for-like sales in its trading update due to be released tomorrow.

Analysts from the City have forecast a decline in Tesco’s UK like-for-like sales of up to one percent for the first quarter ended May 25 as a result of non-food sales under pressure.

That would be a reversal of the rise of 0.5 percent in the previous quarter, which was Tesco’s best quarterly outcome in three years.
Experts also expect a drop in sales in crisis-struck Europe as well as in Asia, where the retailer has been hit by the introduction of a new Sunday trading restrictions in South Korea, its biggest international market.

“Tesco has backed the wrong format, with hypermarkets having had their day, and is left with a big problem in Europe. We believe Tesco should rationalise its international operations further,” Investec Securities said on Monday.

Tesco has suffered more than its major UK rivals, partly because it sells more discretionary goods like homewares and electricals where shoppers have been cutting back the most. Poor weather as well as the horsemeat scandal have additionally depressed sales at Britain’s largest grocer by market share.