RLD.L Share News (RLD)

LONDON (Alliance News) - Tesco Wednesday reported a sharp drop in sales in the first quarter of its financial year, as Britain's biggest supermarket chain said it was hit hard by deep price cuts across the business and by the acceleration of its store refit programme, while warning of more UK sales declines in coming quarters.

Tesco posted a 3.3% like-for-like decline in sales including petrol for the quarter ended May 24, and a 3.2% fall excluding petrol. It was hardest hit in the UK, where like-for-like sales in the business were down 3.8% including petrol, and 3.7% excluding petrol. It was the third consecutive quarterly decline in UK like-for-like sales excluding petrol.

The group highlighted weak sales figures from the UK and Europe, deep price cuts, and an increasingly competitive UK market as the reason behind its poor performance. Chief Executive Philip Clarke also warned that its turnaround plans for the business will continue to weigh on "short term" like-for-like sales.

"The drop in UK sales is exactly what we expected as we increased our store refresh programme and because of deep discounting," Clarke told journalists in a call Wednesday. "We haven't seen a quarterly like-for-like performance like this before, but we have also not seen competition like this before in the industry."

Clarke said there are even more price cuts to come.

--------
FTSE 100: down 0.3% at 6,814.32
FTSE 250: up 0.03% at 15,976.42
AIM ALL-SHARE: up 0.3% at 810.32
GBP-USD: up at 1.6757
EUR-USD: down at 1.3624
GOLD: up at USD1,245.80 an ounce
OIL (Brent): up at USD109.25 a barrel
--------
Top UK Corporate News
--------
RPC Group reported a 22% increase in its full-year pretax profit, thanks in part to its acquisitions of M&H Plastics and Helioplast. It said it made a GBP59.0 million pretax profit in the year to end-March, compared with GBP48.2 million a year earlier, as revenue grew to GBP1.05 billion, from GBP982.3 million.
----------
Workspace Group said its pretax profit for the year to end-March rose to GBP252.5 million, from GBP76.4 million in the previous year, as it reported a rent-roll and property portfolio valuation increase. Net asset value rose 43% over the year to 496 pence, from 348 pence. Liberum Capital said the level of growth is "outstanding," beating the brokers forecast by 6%. Moreover, the company picked up significant momentum in the second half of the year, meaning it's "only now hitting its late-cycle sweet spot," said Liberum analyst Michael Burt. Management also announced a 10% dividend increase to 10.63 pence, up from 9.67 pence paid last year.
----------
Ophir Energy reported successful results from its Taachui-1 and subsequent Taachui-1 ST1 well in the Block 1 license, offshore Tanzania, resulting in a new gas discovery at the site with a net pay of 155 metres. Ophir has a 20% stake in the block, while BG Group is operator with a 60% stake. Ophir said the find means it still has a 100% drilling success rate on Blocks 1, 3 and 4 in Tanzania, where it is hoping to develop Liquid Natural Gas operations.
----------
Synergy Health raised its total dividend and expressed confidence in its strategy to speed up earnings growth, as it posted a pretax profit of GBP42.9 million for its last financial year, up from GBP38.0 million a year earlier. Revenue rose to GBP380.5 million, from GBP361.2 million, driven by new contract wins. Those which also added GBP500 million to its order book, which now stands at GBP1.5 billion.
----------
UK Telecoms Regulator Ofcom is introducing proposals to further lower the wholesale cost of connecting mobile phone calls. Under the new proposals, Ofcom would bring in a new charge control for all operators, reducing the cost of termination rates, or the charge from a network operator to a provider when a user calls a mobile phone on another network. As the provider then incorporates these rates into retail prices for customers, this would in turn lower the costs for mobile calls.
----------
AIM MOVERS
----------
Rare Earth Minerals is a big gainer after it said that the mineral resource at its Sonara Lithium Project in Mexico has been increased, and subsequently has been upgraded to the indicated category, from inferred. Drilling results indicated a total of 3.28 million tonnes of lithium carbonate equivalent from the project, which it said was an increase of 37% from previous estimates. Richland Resources is up after it exercised its option to acquire the Nardoo Sapphire project in Queensland, Australia for AUD1.2 million, plus 18 million new shares worth about GBP396,000 at current price. Richland said the acquisition will allow it to establish a major sapphire hub in Australia. Leni Gas & Oil is another gainer after terminating negotiations with Pansoinco srl over a possible partnership in Leni Gas & Oil's oil and gas assets located in northern Spain. It said it is better off going it alone because of the cash it expects to get from its Trinidad operations. Camco Clean Energy is also up after its Renewable Energy Dynamics Technology Ltd subsidiary did a manufacturing deal with Jabil Circuit Inc, a key step as the subsidiary accelerates towards commercial sales of its flow batteries in the near future. Tungsten Corp is doing well after it said its e-invoicing platform has been accredited as a supplier to the UK government's cloud framework that's used by public sector bodies.
----------
Top Economics And General
----------
The UK service sector sustained its strong growth momentum in May, as robust gains in activity and new work led to the fastest employment growth in 17 years, survey data from Markit Economics and the Chartered Institute of Purchasing & Supply showed. The CIPS/Markit Purchasing Managers' Index for the services sector eased slightly to 58.6 from April's 58.7. The score was higher than the 58.2 forecast by economists. A PMI reading above 50 suggests expansion in the sector. Job creation in the British service sector was the strongest since 1997 as firms hired staff to deal with higher sales and outstanding work. Further, businesses hired staff as they have expansion plans on expectations for continued market growth.
----------
Shop prices in the UK were down 1.4% on year in May, the British Retail Consortium said. That was unchanged from the previous month's reading, although it missed forecasts for a decline of 1.3%. Food prices were unchanged at 0.7%, the data showed, while non-food prices tumbled an annual 2.8%.
----------
The UK government pledged to continue supporting its controversial Help to Buy and Right to Buy home buying schemes in the next parliament, amid other measure to try and stimulate new house building. Pensions reform was also at the centre of the annual Queen's Speech, which sets out the laws the government will try and pass in the next parliamentary year. Another bill, the Infrastructure Bill, would make it possible to run shale gas pipelines under people's land without their permission.
----------
The euro area economy grew as initially estimated in the first quarter, second estimate from Eurostat showed. Gross domestic product in the 18-nation currency bloc grew 0.2% sequentially, slower than the revised 0.3% expansion posted in the fourth quarter of 2013. On a yearly basis, growth accelerated to 0.9% from 0.5%
----------
Producer prices in the euro area fell at a slower pace in April, in line with economists' expectations, figures from Eurostat showed. Industrial producer prices on the domestic market declined 1.2% year-on-year, following a 1.6% fall in March. The latest drop was the smallest since December last year, when prices fell 0.7%. Month-on-month, producer prices slid 0.1% in April, after falling 0.2% each in the previous two months. Prices dropped for the fourth month in a row. Both yearly and monthly declines were in line with economists' expectations.
----------
The Eurozone private sector growth slowed more than initially estimated in May, final data from Markit Economics showed. The final composite output index fell to 53.5 from a near-three year high of 54 in April. The score was estimated to fall marginally to 53.9 in May. However, Markit said the euro area remained on course to record its best calendar quarter of economic growth for three years.
----------
Ukrainian president-elect Petro Poroshenko met with US President Barack Obama along with US Secretary of State John Kerry in Warsaw, Polish TVN24 TV channel reported. The leaders made no immediate public statements, but Poroshenko praised Western solidarity over Ukraine's conflict with Russia. "We see that in this moment the whole world is on our side. The aggressor is condemned to isolation," he said in comments made late Tuesday in Warsaw. Poroshenko and Obama are to attend celebrations in Warsaw marking the 25th anniversary of the first democratic elections in communist Poland, where the US President is to hold a speech. Poroshenko is expected to join Western leaders for the D-Day celebrations in Normandy on Friday.
----------
German Federal Prosecutor General Harald Range is to launch a probe into claims that the US intelligence service eavesdropped on Chancellor Angela Merkel's mobile phone conversations.
Range told a closed session of the German parliamentary justice committee Wednesday of his decision to undertake the investigation into the claims about the activities of the US National Security Agency (NSA) in Germany, officials told dpa.
----------
China's non-manufacturing sector expanded at the fastest pace so far this year in May, mirroring robust new orders and improvement in the employment situation. The non-manufacturing Purchasing Managers' Index, or PMI, climbed to 55.5 in May from 54.8 in April, survey results from the National Bureau of Statistics and the China Federation of Logistics and Purchasing showed. The official PMI for manufacturing also picked up in May, on foreign demand and infrastructure investment, data published over the weekend revealed. The index rose to a 5-month high of 50.8 in May. Meanwhile, the private Markit/HSBC manufacturing PMI reading was below 50 in May.
----------
Police stopped vehicles and questioned pedestrians passing Tiananmen Square in Beijing on Wednesday amid tight security to prevent people marking the 25th anniversary of a military crackdown on democracy protests. Hundreds of plainclothes and uniformed police lined the stretch of Beijing's Chang'an Avenue that crosses the north of the square, checking identity cards and searching the bags of people entering the vast space. The police also stopped some cars travelling along the road and questioned the occupants. The authorities employed some of the heaviest security seen in Beijing for several years, partly prompted by recent terrorist attacks.
----------
South Koreans headed to the polls in the first nationwide vote since public anger erupted over the Sewol ferry disaster in April. Leaders of the ruling conservative Saenuri Party have called for voters to give it another chance in the local and municipal elections, after confidence in President Park Geun Hye's administration plummeted due to the fatal ferry accident. Saenuri campaigned on a promise to fix social problems that it said were revealed through the ferry tragedy, South Korea's Yonhap News Agency reported. The largest opposition party, New Politics Alliance for Democracy, called for voters to make a judgement on the government, saying it had failed to protect South Korean lives.
---------
Afternoon Watchlist (all times British Summer Time)
---------
13:30 US Nonfarm Productivity
13:30 US Trade Balance
14:45 US Markit Services PMI
15:00 US ISM Non-Manufacturing PMI
15:30 US EIA Crude Oil Stocks change
19:00 US Fed's Beige Book
---------
Thursday's Key UK Corporate Events
---------
Acal Full Year Results
VP Full Year Results
Johnson Matthey Full Year Results
Wincanton Full Year Results
AO World Full Year Results
easyJet May Traffic Statistics
Bellway Interim Management Statement
---------
Thursday's Key Economic Events (all times British Summer Time)
---------
All Day G7 Meeting
02:30 Japan BOJ Policy Board Member Sato Speech
02:45 China HSBC China Services PMI
06:30 France ILO Unemployment
07:00 Germany Factory Orders
10:00 EU Retail Sales
12:00 UK BoE Interest Rate Decision
12:00 UK BoE Asset Purchase Facility
12:30 US Challenger Job Cuts
12:45 EU ECB Interest Rate Decision
13:30 EU ECB Monetary policy statement and press conference
13:30 US Initial Jobless Claims
15:30 US EIA Natural Gas Storage change 114B
18:30 US Fed Minneapolis's Narayana Kocherlakota speech

---------

Contact: +44 203 668 7440; newsroom@alliancenews.com; @AllNewsTeam

Copyright 2014 Alliance News Limited. All Rights Reserved.