SHARE OF THE WEEK: Tesco shareholders hoping for positive update

SHARE OF THE WEEK: Tesco shareholders hoping for positive update with half-year results, having seen shares tumble around 30% this year

Tesco shareholders will be hoping for a positive update next week, having seen its shares tumble around 30 per cent this year. 

Like its rivals, the supermarket giant is being buffeted by the rising cost of doing business and subdued demand among customers desperately seeking bargains. 

With Aldi and Lidl on the march, the Big Four of Tesco, Sainsbury’s, Asda and Morrisons are reluctant to raise prices – as that could send shoppers flocking to discounters in even greater numbers. 

Morrisons has been leapfrogged by Aldi, which is now Britain’s fourth-biggest supermarket. Tesco remains dominant, with a 26.9 per cent share of the market, according to Kantar.

But with the shares falling, its management is under pressure to deliver reassuring half-year results on Wednesday, though analysts at Goldman Sachs believe the bleak market outlook towards the stock is ‘overdone’. 

So Tesco will hope to meet, if not beat, expectations for half-year sales of £31.2billion, up from £30.4billion a year earlier. 

First-half profits last year came in at £1.5billion. The City will also want to know if Tesco remains on track concerning its cash flow targets as it aims to generate between £1.4billion and £1.8billion a year. 

Rewards for investors should be nailed on. So far Tesco has returned £300m to shareholders through its current buyback programme, with a further £750m to be handed back by April 2023. 

Analysts expect the proposed full-year dividend to be 10.9p a share, meaning the first-half payment will be flat at 3.2p.