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From the Sunday Telegraph. "Supermarkets have toasted a record-breaking festive season, fuelled by tightened pandemic restrictions that shuttered “non-essential” shops, as well as pubs and restaurants".
Well we all new this anyway, but lets hope current non investors in Tesco read it, and it gives the share price a boost before the trading update on the 14th January! GLA
https://motortransport.co.uk/blog/2020/12/16/asdas-new-owners-look-to-sell-retailers-logistics-assets-in-1-2bn-deal/
Accountant, your observation on Asda is not to be ignored. The brothers raised the money with other partners and will strip the company of all its saleable assets.
They have sold their logistics side of the business and from what I have read their property portfolio is up for sale with the intention of leasing it back.
All points to straightforward asset stripping and imo have no intention of going head to head with its competitors.
Sorry typo meant to say stock-outs at Asda
Thanks Rosewall. I guess the most important thing will be how much of these additional costs will become part of Tesco’s new business model. I suspect very little in which case most of these items will be classed as ‘exceptional’ costs and therefore included in the adjusted ebitda not ebitda which means sp will be unaffected. The slot times is interesting and will steal much needed market share back from Lidl and Aldi this coming year, just what was needed. Asda is on the way down. Stock puts been an increasing theme this year. Poor management and Walmart’s selling of Asda not a good sign for them. Tesco will benefit big because they are probably seen as their biggest competitor on price. All signs look very good for Tesco
I read that TSCO have offered up Best to the British Government to help with the logistics of rolling out the Oxford/zen vaccine. Best having spare capacity due to the pubs and restaurants being closed.
My local Tesco car park noticeably fuller these last 2 weeks. Many shelves sold out. Good or bad? Not sure. Expect 240p to break soon.
Thank you very much.
11th February. It does say in a recent RNS on or about so I would add before that date.
Atb
As a relative newbie here am considering putting more into here. When is the last day to qualify for the 50p special dividend here? Any reply's greatly appreciated.
XXX
Just to upset you further :-) , the cost to date published in October was £523 million.
Capital cost I don't think is huge. Working from home costs, office upgrades for social distancing, store upgrades similarly, some vehicles but a lot of it will be stock and staff costs e.g. agency workers, 10% bonuses for various periods etc. Against that, the reduction from two hour slots to one hour slots for Click and Collect will see almost double the throughput. Priority slots sees more orders on the van as they are focusing on the efficient use of the van rather than customer convenience. Hope that makes you feel better :-)
Ouch!! Thanks for the info
Guess the question is how much is capital and how much is operating costs. From what I can see all of the screening etc in stores could be capitalised which wouldn’t impact Ebitda. Time will tell how much hits the ebitda line. Good news is much of the costs of covid will be sunk and forwarding looking the costs disappear ...
XXX
We do have an idea of the cost of Covid. At the last published count, beginning of December, it was £725 million. The costs are ongoing.
Good reasoned post XA. Small top up yesterday as another inevitable lockdown approaches (tier 4). Many retailers outside of food will have to close which should again help supermarkets cover the costs of Covid.
I suppose the question is how much of the city’s expectation is already factored in the current share price.
My opinion is not at all hence my trade yesterday.
Feeling quite bullish here but have ring fenced a bit more cash for a final purchase should the sp fall back to the low £2.20s
Agreed. Slowly up each day, no drama....
When you hear that sales have been up 10% this year ebitda could hit £1.6-£2bn which x multiple of 15 times, sp could rise to £2.65. But....we have no idea of the costs of covid so that’s an ‘up to’ number. Think the 25% special dividend will lose 12% off the sp net of the div as Asia bus only contributes 13% of group ebitda. Upside on Tesco (inc Divi) could be 20-30% in Q1 2021 and then as other businesses start to release poor trading figures and weak outlook people will flock to defensive shares like Tesco. P/E multiple could top 20-30 times ebitda. (That’s a sp north of £3 again...Tesco has to be one of the safest companies financially in the FTSE100 right now. You can join a rollercoaster share or sleep well and watch this appreciate all year...
Big giant just gently strolling on great to see.
Webba1
The copy and paste paragraph re buybacks was, from memory, the same as the one published recently in Motley Fool. It is just an orchestrated move o drum up support for a failed policy. There has been no indication, not even a hint, of a buyback scheme. The money is earmarked and has been voted upon by shareholders. Th BoD are unable to change that.
Ocado do very well.
A little bit difficult to make comparisons. The online delivery business is very much different to 2014 and has grown to meet demand. Also with Covid you could argue that many customers that were happy to drive to their local store will in the future continue with a delivery service.
Shopping trends have also changed which the Co Op seeing a shift to daily shops. TSCO are positioned perfectly for this with small daily shops being supported with a weekly delivery.
I also think Amazon partnering up with Morrison’s is a good indicator on the future of food retail.
That said, as you correctly state it is hard to find figures on the profitability or otherwise of the delivery service.
* Tesco only once made a comment on the profitability of home delivery
In store sales subsidise home delivery.
Now that is ok(ish) except for one fact - home delivery is growing
while instore sales are on a long term trend downwards.
Tesco only once made a comment on the profitability of home retail,
from memory back in 2014 when they categorically stated it was profitable.
Around 2014 coincided with the peak margin on Tesco UK food retail at
approx 6.3%, a margin now they could now only dream about.
To the best of my knowledge no comment has been made since on the
profitability, or otherwise of home delivery since.
Why?.
Panderman
I am also bemused as to the lack of follow through today.
It could be net funds avoiding the large divi but I don't really think that is too likely as they have had months to get ready for this special dividend moment, nonetheless I intend adding again today.
Can't understand this, Tesco should be flying today, what is holding it back? Special dividend coming, brexit out of the way, everybody in the country buying at Tescos at the moment.
Likewise, not seen any news from TSCO of a buyback scheme. The money from the sale of the Asian business has already been earmarked for the pension and special dividend. The GM in February is a formality IMO.
Hi Webba3
I also have not seen anyone mention a share buyback scheme for Tescos. That quote from proactive doesn't mention a buyback policy.
Any chance you could post or share a link to an article or news item that mentions this ?