Why Tesco Plc Has Gained 9% Since This Time Last Year

Tesco plc (LON: TSCO) has issued a series of uninspiring statements of late.

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Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US) has lagged the broader market during the last 12 months, increasing 9% against the FTSE All Share‘s 15% gain.

Tesco, which has an estimated 30% market share of the massive £24.5 billion grocery industry, had been one of Britain’s most consistent investments until it issued a profit warning in January 2012.

So how has it done since? Let’s take a look at its recent reports.

In April, Tesco — the world’s third biggest retailer after Wal-Mart and Carrefour — announced that it would write down the value of its global assets by £2.3 billion as it abandoned its loss-making Fresh & Easy venture in the United States.

Tesco’s 2012/3 results also revealed the company had booked an underlying pretax profit of £3.55 billion for the year, broadly in line with analysts’ expectations but down 14.5% on the previous year.

The grocer noted that the dip in profits reflected the Fresh & Easy losses as well as a £1 billion cost of the company’s UK turnaround plan, restrictions on store opening times in South Korea, and fallout from the eurozone debt crisis on eastern European markets — which Tesco boss Philip Clarke claimed had created “the worst set of economic circumstances for consumers since the end of communism”.

Then in June, Tesco issued an update on how its first quarter of the current financial year was going.

For the 13 weeks ending 25 May 2013, Tesco reported that its group sales increased a modest 2.7%. The company said its like-for-like (LFL) sales — or sales driven by stores open for more than a year — were showing signs of improvement.

But internationally, Tesco’s growth wasn’t so exciting — only two of the company’s 10 international markets posted positive LFL sales for the period.

Meanwhile, online sales — Tesco’s fastest-growing division — continued to pick up speed.

Mr Clarke commented at the time:

“We have set out our plans to put customers back at the heart of the way we do business, and this is particularly evident in our recent initiatives on price and on food trust. Importantly to the objectives we have set out for sustainable and disciplined growth, customer perceptions are improving across all aspects of the shopping trip in the UK, driven by continued progress on our plans to ‘Build a Better Tesco’ and our market-leading multichannel offer.”

The next update from Tesco will be published on 2 October 2013 and should reveal to investors just how well the company is doing at attracting and keeping customers.

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> Both Jill and The Motley Fool own shares of Tesco.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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