As Tesco prepares to announce its interim results, clouds are circling over supermarket’s share price
It’s not only Morrisons shareholders counting their blessings as two private equity giants prepare to push the bidding for the grocer ever higher this weekend.
The takeover battle has pushed up the value of all of Britain’s supermarkets – and reminded investors of the very reliable cash income that they can provide.
But as Tesco prepares to announce its interim results on Wednesday, clouds are circling over the share price, which has been lifted 8.2 per cent to 247.95p in the past six months by the feeding frenzy in the UK grocery sector.
Investors will be keen to hear how Britain’s largest supermarket will keep the worst of the supply chain crisis at bay, and keep prices low for its customers to ward off the threat of Aldi and Lidl.
Chairman John Allan this week warned that supply chain chaos and the rising cost of energy and raw materials could push food prices up 5 per cent.
Tesco will highlight several bright spots. It has had strong Christmases following the turnaround led by former boss Dave Lewis, and this year it has increased its share of the grocery market by half a percentage point to 27.3 per cent.
It increased sales by 1pc in the three months to June over and above the period of panic buying in 2020. Analysts will be looking for a strong recovery in profits as pandemic-related costs start to decrease, pushing it to a £1.8billion profit for the full-year.
They have also pencilled in a dividend of 10p per share.