Wednesday preview: Tesco to report first quarter results

4th Jun 2013 15:27

Tesco's first quarter results out Wednesday are likely to disappoint, according to Investec.The broker expects like-for-like sales to fall as much as 1.0% in the UK, 2.5% in Asia and 5.0% in Europe. It downgraded the stocks to a 'sell' rating and issued a target price of 295p. "The UK still lacks momentum and international is going from bad to worse," Investec analyst Dave McCarthy said.He said the international side of the business is a growing problem and after 15 years there is no sign of acceptable returns. The company's latest results will come after the retailer last month reported its first annual profit decline in two decades. Chief Executive Officer, Phil Clarke, has been working to turn the business around with a £1.0bn restructuring plan which was launched after the supermarket issued a profit warning in January 2012.However, Mcarthy said dynamics are working against Tesco. He believes the supermarket won't meet its UK target margin of 5.2%."We find aspects of the Tesco strategy contradictory and find it hard to see how the UK operating margin can be maintained, given company and industry dynamics," he said."We would not be surprised to see another UK margin reset in due course." Last week, JPMorgan also cautioned investors, saying that a weak UK food retail market was weighing on the company. It slashed its rating from 'overweight' to 'neutral' and its target price from 425p to 390p.The broker said that sector fundamentals remains "unattractive" for a variety of reasons: "4.0% space growth; flat volumes; private players taking 80 basis points (bp) of market share; online taking another 80bp, industry profitability at an all-time high, potential implication on supermarket property prices."Wednesday June 5thINTERIMS Alternative Networks, Terrace Hill Group INTERIM EX-DIVIDEND DATE Artemis VCT, Associated British Foods, Blackrock Frontiers Investment Trust, British Empire Securities & General Trust, Cardiff Property, Daily Mail and General Trust 'Ord' Shares, Daily Mail and General Trust A (Non.V), Debenhams, Grainger, Greencore Group, Hargreave Hale AIM VCT 1, Income & Growth VCT , Jersey Electricity 'A' Shares, Majedie Investments, Northern Venture Trust, Renew Holdings, Schroder UK Mid Cap Fund QUARTERLY EX-DIVIDEND DATE Bank of America Corp. INTERNATIONAL ECONOMIC ANNOUNCEMENTS ADP Private employment report (US) (12:15) Crude Oil Inventories (US) (15:30) Goods Orders (15:00) Goods Orders (US) (15:00) ISM Non-Manufacturing (US) (15:00) ISM Services (US) (15:00) MBA Mortgage Applications (US) (12:00) PMI Composite (EU) (09:00) PMI Composite (GER) (08:55) PMI Services (EU) (09:00) Producer Price Index (GER) (07:00) Productivity (US) (13:30) US Federal Reserve Beige book GMS Mears Group IMSS Tesco FINALS Findel, First Property Group, Synergy Health ANNUAL REPORT NewRiver Retail Ltd. (Reg S) SPECIAL DIVIDEND PAYMENT DATE Ashley (Laura) Holding SPECIAL EX-DIVIDEND PAYMENT DATE Alliance Trust, Artemis VCT AGMS Amara Mining, Bisichi Mining, Blur (Group), Capital & Regional, Elderstreet VCT, Eurasian Natural Resources Corp., Gulfsands Petroleum, JKX Oil & Gas, Magnolia Petroleum, Mears Group, Moss Bros Group, Proton Power Systems, Waterlogic UK ECONOMIC ANNOUNCEMENTS BRC Shop Price Index (00:01) Halifax House Price Index (09:30) Official Reserves (09:30) PMI Composite (09:30) PMI Services (09:30) FINAL DIVIDEND PAYMENT DATE British Smaller Companies VCT 2, SThree FINAL EX-DIVIDEND DATE Aberdeen New Thai Inv Trust, Anglo Pacific Group, Anglo-Eastern Plantations, Bank of Georgia Holdings, Bioquell, Brammer, Capital Gearing Trust, Christie Group, Cineworld Group, Cupid, Good Energy Group, Hargreave Hale AIM VCT 2, Headlam Group, Inspired Energy, Irish Continental Group Units, Judges Scientific, London Security, M&C Saatchi, Marshalls, Mckay Securities, Moss Bros Group, National Grid, Pace, Quarto Group Inc., Synthomer, Vindon Healthcare, WPP, Young & Co's Brewery 'A' Shares RD