Tesco’s opening salvo in 2015: Price cuts
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UK supermarket giant Tesco PLC has announced “difficult changes” to its business at the start of the year, including the closure of 43 stores, lower prices on the country’s favourite brands, flat investment in payroll, and significant revision to its store building program and reduced capital expenditure budget.
“I am very conscious that the consequences of these changes are significant for all stakeholders in our business but we are facing the reality of the situation. Our recent performance gives us confidence that when we pull together and put the customer first we can deliver the right results,” said Tesco Chief Dave Lewis.
This came at the heels of group sales for the 19 weeks to 3 January 2015 declining by 0.6 percent at constant rates, including fuel and by 1.9 percent, including fuel.
In Asia, total sales for the 19 week period declined by 1.5 percent at constant rates, with like-for-like sales declining by 4.6 percent.
It said market conditions across the region remain challenging. In Thailand, sales trends improved over the period as we annualized the impact of the external pressures linked to political disruption last year. In Korea, a higher number of enforced Sunday closures under the DIDA opening regulations affected the performance of all large retailers.
Speaking to Jody Hodges, Group Project Planning Director at Tesco, in a video interview, Lewis said there are three priorities now: recovering the competitiveness in the core UK business, protecting and strengthening the balance sheet, rebuilding the trust and the transparency in the brand and the business.
On 8 January, Tesco cut prices on hundreds of branded products in response to demands from customers for simpler, lower and more stable prices.
“We know that brands are important to our customers: they’re the products families don’t want to do without. So from today, customers will be able to buy many of their favourite products cheaper at Tesco – from Tetley Tea to Colgate Triple Action Toothpaste, Hovis White Bread to Kellogg’s Cornflakes,” said Tesco’s Chief Customer Officer, Jill Easterbrook in a statement.
She added that overall, the company is cutting the prices of around 380 branded products by an average of 25 percent.
Questions & Answers
Q.What is Tesco's main focus for its UK operations moving forward?
What is Tesco's main focus for its UK operations moving forward?
Tesco Chief Dave Lewis stated that a key priority is to recover competitiveness within their core UK business. This involves significant changes including store closures and price reductions on popular brands to better serve customers.
Q.What specific actions has Tesco taken regarding its branded products?
What specific actions has Tesco taken regarding its branded products?
Tesco has cut prices on hundreds of branded products, responding to customer demand for simpler and lower prices. Approximately 380 branded items have seen an average price reduction of 25 percent to enhance competitiveness.
Q.How have Tesco's sales performed recently, particularly in Asia?
How have Tesco's sales performed recently, particularly in Asia?
Group sales for the 19 weeks to 3 January 2015 declined by 0.6 percent with fuel and 1.9 percent without. In Asia, total sales fell by 1.5 percent, with like-for-like sales down by 4.6 percent, indicating challenging market conditions.
Q.What external factors affected Tesco's performance in its Asian markets?
What external factors affected Tesco's performance in its Asian markets?
In Thailand, performance was impacted by political disruption the previous year, though sales trends improved. In Korea, enforced Sunday closures under DIDA regulations negatively affected all large retailers, including Tesco, during the period.