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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Wm Morrison Supermarkets    MRW   GB0006043169

WM MORRISON SUPERMARKETS (MRW)
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Tesco outshines rivals with best Christmas since 2009

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01/10/2019 | 05:47am EST
FILE PHOTO: A Tesco supermarket is seen at dusk in an 'art deco' style building at Perivale in west London

LONDON (Reuters) - Tesco, Britain's biggest retailer, defied the industry gloom on Thursday, saying improvements in its own-brand ranges helped deliver its best Christmas in nearly a decade.

The supermarket group reported a 2.2 percent rise in same-store sales in its home market in the six weeks to Jan. 5, beating rivals Sainsbury's and Morrisons and helped by deals such as its "Festive Five" vegetable packs, offering staples such as carrots and sprouts for 29 pence.

Analysts had forecast a rise of 1.0 to 1.5 percent.

The increase contrasted with an industry survey showing UK retailers failed to increase Christmas sales for the first time since the depths of the financial crisis, with shoppers worried whether Britain will secure an orderly withdrawal from the European Union in less than three months' time.

"In the UK we delivered significant improvements in our competitive offer and this is reflected in a very strong Christmas performance which was ahead of the market," said Tesco Chief Executive Dave Lewis.

The company's closest competitors Sainsbury's and Wal-mart's Asda are merging, potentially overtaking Tesco as mainstream supermarkets strive to counter the threat from fast growing discounters Aldi and Lidl.

Lewis said customers had responded to better pricing and quality in Tesco's own-brand products, with 125,000 more shoppers in stores this Christmas than last helping it outperform the market in food, clothing and general merchandise.

Dec. 23 was the busiest Sunday in Tesco's history, he said, and 766,000 customers were served in just one hour at the trading peak, with popular deals including half-priced lamb and beef joints and 25 percent off six bottles of wine.

Shares in Tesco, which is celebrating its centenary this year, topped the FTSE 100 index <.FTSE> in early deals. They were up 1.2 percent at 214.4 pence at 1015 GMT.

Number two supermarket chain Sainsbury's missed forecasts with a 1.1 percent fall in third-quarter sales on Wednesday, while fourth-ranked Morrisons reported a 0.6 percent rise in Christmas sales on Tuesday.

However, industry data showed all of Britain's big four grocers, lost market share over Christmas to German-owned Aldi [ALDIEI.UL] and Lidl.

Lewis said Tesco's strong Christmas - with growth from its "Finest" premium products to new own-brand goods that vie with the discounters - was the result of the recovery plan he initiated after he joined in 2014.

He has lowered Tesco's prices versus all its major rivals, streamlined product ranges and improved quality, while raising store standards and transforming relationships with suppliers.

Analyst Richard Hunter at interactive investor said Tesco's performance was the pick of the bunch.

"The supermarket behemoth has staged a strong recovery over several years, having previously admitted that it had taken its eye off the ball in its core UK market," he said.

"However, Tesco is not yet quite the finished article. Pockets of the business still require attention, margins will remain under pressure given the brutally competitive nature of the sector, let alone the potential threats from the likes of Amazon and a merged Asda and Sainsbury."

Tesco also reported a 0.7 percent rise in UK same-store sales for its third quarter to Nov. 24 - its 12th straight quarter of growth - and said it was confident in its outlook for the full year.

Analysts had forecast quarterly UK like-for-like sales growth of 0.5 to 1.0 percent following 2.5 percent in the second quarter.

For the 2018-19 year, analysts on average expect Tesco to make an operating profit before exceptional items of 2.08 billion pounds, up from 1.64 billion in 2017-18.

(Editing by Jason Neely and Mark Potter)

By Paul Sandle

Stocks mentioned in the article
ChangeLast1st jan.
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.0.00%
J SAINSBURY -1.17% 269.7 Delayed Quote.3.02%
TESCO -1.18% 217.9 Delayed Quote.15.94%
WAL-MART STORES 0.10% 96.35 Delayed Quote.3.44%
WM MORRISON SUPERMARKETS -0.86% 218.8 Delayed Quote.3.49%
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Financials (GBP)
Sales 2019 17 833 M
EBIT 2019 467 M
Net income 2019 288 M
Debt 2019 944 M
Yield 2019 3,88%
P/E ratio 2019 19,04
P/E ratio 2020 15,86
EV / Sales 2019 0,35x
EV / Sales 2020 0,33x
Capitalization 5 227 M
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Technical analysis trends WM MORRISON SUPERMARKETS
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Mean consensus HOLD
Number of Analysts 16
Average target price 2,42  GBP
Spread / Average Target 9,8%
EPS Revisions
Managers
NameTitle
David T. Potts Chief Executive Officer
Andrew Thomas Higginson Non-Executive Chairman
Trevor John Strain Director, Chief Financial & Commercial Officer
Belinda Jane Carew-Jones Independent Non-Executive Director
Richard Colin Neil Davidson Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
WM MORRISON SUPERMARKETS3.49%6 729
SEVEN & I HOLDINGS CO., LTD.-1.11%38 475
SYSCO CORPORATION0.10%32 357
AHOLD DELHAIZE1.18%30 108
WOOLWORTHS GROUP LTD2.04%28 307
TESCO15.94%27 789