Tesco shares RISE despite the group's horrific £6.4 billion loss
Tesco shares are trading to the upside in the opening session of the London Stock Exchange despite Britain's biggest supermarket posting its worst set of results in 100 years.
It confirmed today that it made a £6.37 billion ($9.51 billion) loss for the 53 weeks ending February 28, 2015. Last year, the Britain's largest supermarket posted a profit of £2.26 billion.
In its preliminary 2014/2015 results statement, the British supermarket said group sales, excluding fuel, fell by over 3%.
However, the stock price is up by 1.3%.
This is because analysts had already predicted a substantial loss for Tesco during this period, which would explain why there is a lack of massive stock price movements today.
Tesco's stock price has already dropped by 20% over the last year but has slowly retraced some of its losses since boss Dave Lewis enacted a turnaround plan six months ago.
Tesco's losses were largely down to a number of one off items, meaning that the next period should not be affected by issues again:
- Stock related charges: £570 million
- Restructuring charges: £416 million
- Commercial income adjustments: £208 million
- Impairments (inc. £4.7 billion property, £600 million in China): £5.6 billion
Tesco's rebuilding of its market share is also factored in.
According to Kantar Worldpanel's latest research, Tesco has 28.4% of Britain's market share. This is down from the 30.1% slice of the market is had in 2012.
However, Tesco's sales are growing and it's stopping the decline in market share.
In the 12 weeks ending March 29, 2015, Tesco's shares grew 0.3%, while sales at its rivals Asda and Morrisons declined by 1.1% and 0.7% respectively.
HSBC also highlighted this in an analyst note this week that despite a period of massive under-performance, Tesco has been catching up with the industry in terms of sales growth. It's now no longer losing significant market share:
