Why I'm Buying This Conviction Sell

As the unintended no1 cheerleader for Tesco on the tmf tesco board I feel bound to point out that your article appears to conflate Tesco's group cashflows with it's UK growth prospects.

To be more precise; after a useful comparison of both Tesco and Morrison cashflow figures you then make a throwaway concludiing reference to Morrison's Christmas growth implying that Tesco was worse.

In practice Tesco (group) sales growth was 4% (constant rates) or 2.9%(actual rates) versus Morrisons figures of 2.9%, so not 'unlike' at all even given an adverse exchange rate, though at the like-for-like level Morrison's 0.7% certainly trumped (or is that thumped?) Tesco -0.3%. Though, as you'd expect I'd question the role of like-for-like grocery figures over such a short period in a growth comparison.

Morrison's growth figures may look intact to you, but Tesco's don't look as bad to me as you seemed to imply. and given that Morrisons growth has to be in the UK, whereas Tesco's investment for growth has been and remains largely international I know where I would be looking for more growth.

Mark

I am watching Tesco (have been foe some years, missed out when they were about £2.80-got Morrisons instead), and although I do not (yet) own any of their shares, I am a customer and can say, from experience, say that in the store that I use they have tightened up considerably on stock control (I generally go for the sell by items, but those are now far fewer following their tighter controls), but their price hikes show that they will be showing better figures soon, but only if they stop trying to con customers with bogofs where they have hiked the price for a single item by nearly 90% for the duration of the offer.

It also usually precedes a price increase.

BTW, locally Tesco and Morrisons track each other pretty closely on prices, Morrisons a day or two behind Tesco.

Still reckon there is a a bump or two to come from Tesco.

well, are we comparing barclays with RBS?

I hold MRW and will continue to do, I feel they are much closer to their customers than Tesco which continues to piss off its customers by not manning enough tills. Almost as bad as B&Q used to be. Tesco has spread itself too thinly and the management just aren't up to the immense job of running this vast outfit. They probably need a US MD to show them how to do it.

While MRW had a better Christmas than Tesco, it was still lower than the city inflated expectations. The share price has been punished on the back of Tesco's result although nowhere near as bad. Sainsbury had their best Christmas ever and likewise fell on the Tesco "not enough profit at £3.6billion to satisfy the city" massacre.

All three are actually doing quite well if you take into account that we are in austerity times and people have less to spend, but to put it simply, right now the market does not like retailers at all. Of the big players, MRW has the most racy P/E of the three at a lofty 12.5. Until city sentiment changes towards retailers, which may be some time yet, I don't think the good fundamentals for these matter very much. I'm guessing that Goldman Sachs are probably short, trying to make back some of their losses on dodgy mortgages.