Tesco – Crossing The Finish Line As Spending Normalises

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Tesco – Crossing The Finish Line As Spending Normalises
cosmix / Pixabay

First quarter like-for-like (LFL) sales rose 1% to £13.4bn, as Tesco PLC (LON:TSCO) laps the heightened demand from the pandemic this time last year. 0.5% growth in the UK (75% of total sales) and 9.2% growth in Wholesale business Booker (13% of sales), offset declines in the Republic of Ireland and Central Europe.

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Q1 2021 hedge fund letters, conferences and more

In the UK, online sales grew 22.2% on last year, but these are up over 80% on a two-year basis. General Merchandise and Clothing LFLs rose 10.3% and 52.1% respectively. Tesco Bank sales fell 10%.

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Tiger Legatus Master Fund was up 0.1% net for the second quarter, compared to the MSCI World Index's 7.9% return and the S&P 500's 8.5% gain. For the first half of the year, Tiger Legatus is up 9%, while the MSCI World Index has gained 13.3%, and the S&P has returned 15.3%. Q2 2021 hedge Read More


The profit guidance from April is unchanged.

The shares were unmoved following the announcement.

A Look At Tesco's Q1 Earnings

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown:

Tesco’s first quarter numbers look sluggish, but that’s because they’re lapping the unprecedented demand triggered by the pandemic this time last year. While Tesco might be catching its breath as it crosses the finish line, the work doesn’t stop there. As we know, Covid has massively accelerated the shift to online, and digital demand is going to remain heightened. Tesco has done an amazing job of ramping up digital capacity, and is outshining some peers. Keeping hold of that momentum will require a near perfect execution of its attempts to build scale.

There’s a wider read across from these results too – General Merchandise and Clothing seem to be faring very well, albeit they’re starting from a much lower base after the pandemic slashed demand last year. It seems people’s spending patterns are normalising, and not necessarily reining in expenditure despite lingering economic uncertainty. The shakedown in consumer habits hasn’t finished yet, but this early indication could have positive connotations for other retailers.”


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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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