// Tesco shareholders hoping for a nice payout in half-year update, especially after selling off its Asia business, analysts say
// Tesco expected to post £58.5bn in sales, operating profit predicted to be £2.2bn & pre-tax profit £1.4bn
Tesco shareholders will eagerly be hoping for a payday later this week as the retail giant gives them the best behind-the-scenes look at how it coped with Covid-19.
The supermarket’s half-year results will be presented by new chief executive Ken Murphy, who will only have led the Big 4 grocer through six days of the last six months after taking over on Thursday.
Analysts said investors may be hoping he might want to impress with a payout, slicing up some of the cake from recent big windfalls, such as the sale of Tesco’s Asia business.
- Ken Murphy starts as Tesco’s new CEO, replacing Dave Lewis
- Tesco shareholders reject £6.4m golden handshake for outgoing CEO
- Charles Wilson resigns as CEO of Tesco’s Booker wholesale arm
“Look out for comments on the planned special £5 billion cash distribution once the Thai and Malaysian disposal goes through, that equates to around 51p per share,” AJ Bell investment director Russ Mould said.
Analysts added that Tesco’s shareholders could also be eyeing up the dividend that bosses decide to pay out too.
Mould said lockdown had increased supermarket sales, as people were unable to go to restaurants and pubs.
However, Tesco still lost some ground to its competitors.
“Tesco has lost market share over the past year, albeit only one 10th of a percentage point, according to data from Kantar Worldpanel, in what remains a fiercely competitive market,” he said.
Three months ago shareholders got a peek behind the curtain when the company showed that like-for-like sales had grown by 7.9 per cent, and had shot up even quicker, 8.7 per cent, as online sales soared by nearly half.
However, Mould said this would likely have slowed a little recently.
“It seems logical to assume that the rate of growth eased a bit for the June-to-August period as people began to venture out again and were actively encourage to do so by the Eat Out To Help Out scheme,” he said.
Hargreaves Lansdown senior investment and markets analyst Susannah Streeter said: “In terms of sales, supermarkets have been among the big winners during the pandemic, as people raced to stock up on lockdown supplies.”
She said that Tesco had managed to steal back some of its lost customers from Aldi through online deliveries.
“But now Aldi is making a bigger move into digital grocery sales so those new customers could well be switching back,” she said.
Analysts expect the company to reach sales of £58.5 billion in the full financial year, a reduction of around £1 billion on a year earlier.
Operating profit is predicted to be £2.2 billion, according to a company-compiled consensus, with pre-tax profit of £1.4 billion.
with PA Wires