Tesco’s share price (LON:TSCO) has been little changed in London in today’s session with investors digesting news that Britain’s biggest supermarket is considering a trial of an upmarket convenience store, just months after launching its discount brand, Jack’s. The blue-chip grocer updated the market on its strategy yesterday, signalling opportunities to improve margin.
As of 14:38 BST, Tesco’s share price had inched 0.17 percent lower to 235.10p. The shares are marginally outperforming the FTSE 100 index which currently stands 0.31 percent lower at 7,420.27 points, with investors staying on the sidelines ahead of a highly-anticipated policy decision by the US Federal Reserve.
‘Tesco finest’ prospects
Reuters reported that Britain’s biggest grocer, which yesterday held a Capital Markets Day, had presented a slide flagging an opportunity for a ‘Tesco finest’ store concept with a seven-percent operating margin, significantly ahead of the group-wide target of between 3.5 percent and four percent.
“‘Tesco finest’ as a brand is one of the largest food brands in the country. We have a very high percentage of more upmarket customers,” Chief Executive Dave Lewis told reporters today, as quoted by the newswire, adding that the “opportunity to curate that range and bring new things in a more convenient outlet is something that we have tested, is something we’re interested in”.
Lewis, however, noted that the grocer was “not at a place where we are saying we’re going to open this shop or this many shops”.
Analyst ratings update
Morgan Stanley reaffirmed Britain’s biggest grocer as an ‘overweight’ today, without specifying a target on the Tesco share price, while Deutsche Bank, which rates the company as a ‘buy,’ trimmed its valuation on the stock from 295p to 285p. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 278.80p.