The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Got to admit, I’m surprised at the level this is currently trading at. I would of thought in this climate it would be one of the stocks trading far higher, may have to consider topping up if it goes much lower.
"Tesco will remain extremely busy and also hope that the now much improved/more efficient Tesco will benefit all customers & shareholders going forward."
Unfortunately, the reality is very different. I see it day in and day out. Lots of activity but very little stock (better now but at what price increases for non contractual goods). Hugely higher costs. 15% staff discount, 10% increase in wages for doing the same job, vans going out 3/4 full due to lack of stock, lots of new costly bodies and vans (how many will be needed afterwards). And how can you be more efficient when some stores are 20+ drivers down. I won't even go down the route of how many cancelled orders. I may be totally wrong but I make my investment judgement on what I see before me.
New / repeat subject:
The SP is rapidly approaching my buy price again.
Thanks to all regarding responses on the possible 5 meter social distancing. Yes agree it should have negleagible effect on Tesco business. Especially since
A/. We are extreemly precise and good at queing.
B/. Large % of customers have nothing but time on their hands anyway.
As per Bloomberg: "Walmart has put the sale of a majority stake in its U.K. grocery chain Asda on hold to focus management’s attention on running the business amid unprecedented spikes in demand driven by the coronavirus" which needless to say, one can also assume that due to this "unprecedented spikes in demand", Tesco will remain extremely busy and also hope that the now much improved/more efficient Tesco will benefit all customers & shareholders going forward.
Agree SBP, potential bookings far exceeds current capacity and delivery demand exceeds current supply. Diversifying supply through local distribution, for example Milk delivery could be one possible solution. My milkman delivers a wide range of skus beyond milk but almost all are permanently out of stock online, just like TSCO delivery slots.
Massive Q-1 sales result surely but how will they fill ongoing demand during lockdown?
It is looking like the Home Delivery Service has maxed out and no new customers are being registered. The CEO is saying if you are not vulnerable, come to the store, take pressure off home delivery.
My local supermarkets are quiet and fully stocked and everyone is keeping their distance, but it is a rural area.
I would imagine they will follow any guidelines/recommendations made by the government. if it changes to 5m, they will just reduce the amount of people aloud in the store at one time.
This will obviously lead to longer ques, but ultimately people still need food.
At the same time they will increase the home delivery network/capacity.
Extract of WHO Report Feb 2020.........
COVID-19 is transmitted via droplets and fomites during close unprotected contact between
an infector and infectee. Airborne spread has not been reported for COVID-19 and it is not
believed to be a major driver of transmission based on available evidence; however, it can
be envisaged if certain aerosol-generating procedures are conducted in health care facilities.
Fecal shedding has been demonstrated from some patients, and viable virus has been
identified in a limited number of case reports. However, the fecal-oral route does not
appear to be a driver of COVID-19 transmission; its role and significance for COVID-19
remains to be determined.
I always thought that a 2 meter distance was just a number and it should have at least been 5 meters depending on the environment , meaning judging whether one is in a static / stationary air movement environment or slight breeze area since it all makes a difference on how far the virus can remain airborne and thus inhaled by another person.
It now appears that the virus can remain airborne for even further than 5 meters. I wonder how this could effect Tesco
especially in their stores ?
I look forward to your comments on this.
May? I wouldn't be surprised if it goes to June tbh. I think there may be a balance here - a controlled release into the community, but one eye on civil disturbance. I understand there have been early signs of unrest in Italy. For the economy they really do need to get people back to work. The 'peace' could end up being as bad as the 'war' if the world goes into depression.
Will be interesting to see the forecast numbers. I personally see lock down at least through part of May and also think this is only wave 1 towards herd immunity, so more to come. Tesco look well positioned compared to the wider market, would like to see 24hr delivery slots and or partnership with other delivery services.
Took my first bite here today.
BOL
Good point 3300, and one that had occurred to me and forgot to put in my post.
After this crisis we wont go straight back to normality. People wont start going out again in the same numbers, the desire to socially distance will continue, not so many nights in pubs and restaurants, not so much use of cafes. So some of the added food/drink volumes from those sources will persist. Plus people may have the 'taste' for home deliveries which I assume adds a margin, helps with stock control and allows smaller (and fewer?) premised to be adopted.
Its going to be a different world afterwards if this lockdown continues as long as we fear. People will be, and will feel, poorer. Some of the froth (nailbars, beauty salons, car detailers etc.) may recede for a time at least.
Whether that is enough to persuade me to invest in Tesco is a question I am pondering.
Same here, all home delivery slots maxed out, pubs and restaurants closed. Should see a great boost to sales for March. I would expect to see a good forecast for Q1 for 20/21
Now very much looking forward to a (IMO) very positive update next week.
Don't forget Tesco along with other supermarkets are in line for a business rates tax holiday this year which supposedly will add another 500 million to the bottom line of Tesco. There's no doubt the additional staff will eat into the net profit but I'm expecting to see a large increase in full year revenue and that normally goes down well with the market.
That's a good post barron. Was looking at this but my decision currently on hold:
The SP hasn't dropped much, for obvious reasons, over the past 3 months compared to the market. So probably not much rise when the market recovers
Additional costs as you say, though hadn't realised quite how much
Great sales, great gross revenue this quarter. But many of these sales are retiming, and quieter quarters will follow
There will be pressure not to make excess profits as a result of Covid - maybe even pressure to make a substantial NHS donation?
On the other side there are clearly some unexpected sales to replace the effect of closed pubs/ restaurants that wont be 'lost' later, also reduced wastage of unsold perishables, less need for promotional offers, some hoarding sales will end up in domestic refuse so wont simply be advance purchases.
Which is a long was of saying I'm sitting on the fence for now!
Correct.
So at work we have a ton of agency staff in to the point we’re finished 90 minutes before the end of shift we then tidy up the yard, cardboard,trays and go backs , when that’s done we help dot com out for 30 minutes with people bagging up the shopping once it’s being picked or other are helping picking the shopping . Also to note is the fact dot com now starts at 4am to be out of the way of the 9am stampede. Now that’s 40 people on dot com now being paid roughly £5 night premium so £200 a day extra in wages £1400 a week now multiply that by how many stores plus the agency staff that’s a flipping lot of extra wages and by no means have I got extra stock at the moment in fact I’d say I have slightly less.
Also Tesco are paying a %10 bonus on all hours worked in the next 12 weeks as they know we can work twice as fast as the agency mob.( a bribe more like) now I don’t know what our current sales are ( I will ask next week) but I’d say the wages are outstripping that cost.
Now I’m going to put my neck on the line and say this special dividend will be pulled and re thought through . The banks have pulled theirs and they will want to look prudent and not profiteering or throwing cash away to shareholders .
I sold a thousand at 220 the other day as I now believe there is value elsewhere in the market and that 50p special dividend is kinda priced into the share..
9.7 billion shares in issue with 5 billion being returned to shareholders equals 51p per share
Exactly!
But even assuming a recession, don't people tend to shop much more from their local supermarket rather than eat out etc. I seem to remember that being the case in 2008/9.
This is a temporary spike in business, good for the short term but once the recession kicks in it will be a different story
Tesco is now a much improved organisation and best positioned amongst all the UK supermarkets to benefit from any surge in business; I also agree that the sp is currently significantly undervalued and a big rise should lie ahead IMO.