Patience test for Tesco investors as £1bn rescue plan fails to boost sales

By Peter Campbell

PUBLISHED: 16:09 EST, 11 June 2012 | UPDATED: 16:09 EST, 11 June 2012

Tesco boss Phil Clarke yesterday tested shareholders’ patience by refusing to predict when his £1billion rescue plan – designed to stem falling sales at the supermarket giant – would begin to work.

Enlarge   Revamp: But investors are still to see the effects of the £1bn turnaround scheme designed to boost sales

Revamp: But investors are still to see the effects of the £1bn turnaround scheme designed to boost sales

The group, which makes 70 per cent of its profits in Britain, reported its third consecutive quarter of falling domestic sales.

In the 13 weeks before May 26, sales in UK stores that have been open for more than a year fell by 1.5 per cent compared with the same period last year, excluding petrol and VAT.

Clarke’s turnaround scheme – launched in the wake of the company’s first profits warning in living memory – was designed to boost sales.

The plan, which includes revamping stores and employing more staff, was launched seven weeks ago as Tesco posted a 1 per cent drop in annual profits from its UK stores to £2.5billion.

Although it began too recently to gain any traction for yesterday’s set of results, Clarke refused to say when the effects would be felt.

Tesco shares, which have lost a quarter of their value in the last 12 months, were unchanged at 302.8p.

 

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Analyst Richard Hunter at Heagreaves Lansdown said: ‘Obviously the plan will take time, but they haven’t got investors’ patience with them at the moment. I think it will be 18 months before the benefits start to wash.’

So far 4,350 of the expected 8,000 extra staff have begun work, starting two weeks before the Diamond Jubilee.

In the week leading up to the celebrations – a period not covered in the results – the chain made more than £1billion in sales in what bosses are hailing as the most successful trading week outside of the Christmas period.

On Wednesday rival Sainsbury’s (0.9p lower at 288.7p) is expected to outshine Tesco by reporting strong growth from its convenience chain and online business.

 
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Tesco need to give a bigger window for spending those money off vouchers. Four or five days isn't long enough; I had to throw one away last week.

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You cant change your reputation and staff preception in such short time, trust take many years to built up, I now shop at Aldi for most of our needs, not because its cheaper, but at least I know what I am expecting rather than told something and get something else instead,.

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When was the last time the the news headline was about Tesco having low fuel prices? As for the poor service, TESCO were the company using un-paid staff. Un-paid staff and the ex CEO got £13m plus. The other paid staff had their hours and pay cut as they were replaced with un-paid staff.

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Why do we in the UK like to kick our companies that are genuinely world class and not support them. Pension schemes rely on Tesco, thousands of workers rely on Tesco for a job. Ok they took their eye off the ball, let them fix it and stop kicking a successful British company and support them instead. With regards staffing - have any of you ever had to work with the rude, arrogant British public. I do daily and let me tell you how rude and unpleasent you are to deal with. Don't read any signs put up, seem to leave your brains at the doors when you enter a shop.

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There is no focus on customers, i have had several bad experiences in Tesco. The last one being the worst and so i complained, still awaiting to hear (and looks like im not alone!) They should stop listening to shareholders and ask customers and more importanyly EX-customers what they want, I for one want better customer service, a more personal service and training for staff so they look less like braindead zombies and more like staff. But hey what would i know? Gotta listen to the big boss man as obviously they know whats right.... ASDA and Morissons are MUCH better

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I arranged an appointment through Tesco Opticians national appointment number. Turned up on correct day at correct time only to find my appointment double booked. Very little by way of apology in store and no reply at all to my complaint from Tesco Opticians appointments service! Have now started using another local supermarket for fuel, food, pharmacy etc. Terrible customer service. Then there's the waterproof towels and meat that goes off 4 days before sell by date I bought recently - the junk it sells get worse by the week!

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Tesco should email a weekly news letter to it customers like Aldi & Lidl telling them what's on offer, that's what gets me into there shops. They have one of the biggest loyalty card systems going so why don't they use it. Copying the Green paint and wood model won't do it as I read in another paper.

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They should get Osborne and then they can blame Europe together!!

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PS I bought a prawn sandwich from a Tesco Extra a couple of weeks ago and one half of the sandwich had no filling - I have written to them but heard nothing as yet!!!!

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Tesco do not care about customers - fact. My local Tesco supermarket has been demolished, the new one not being ready for 12 months. This leaves everyone in the borough who doesn't have a car with NO supermarket within easy reach (unless you want to spend a quarter of your weekend food shopping - no thanks!). The Tesco Online App is totally useless so I have defected to one of their competitors - the move is a permanent one as their prices are better, cheaper delivery and far superior app. Au Revoir Tesco....

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