Free Essay

Tesco Plc

In: Business and Management

Submitted By GlobalTor999
Words 8981
Pages 36
Tesco PLC

Company Profile
Reference Code: 1674 Publication Date: Aug 2004

www.datamonitor.com
Datamonitor USA 245 5th Avenue 4th Floor New York, NY 10016 USA t: +1 212 686 7400 f: +1 212 686 2626 e: usinfo@datamonitor.com Datamonitor Europe Charles House 108-110 Finchley Road London NW3 5JJ United Kingdom t: +44 20 7675 7000 f: +44 20 7675 7500 e: eurinfo@datamonitor.com Datamonitor Germany Kastor & Pollux Platz der Einheit 1 60327 Frankfurt Deutschland t: +49 69 9754 4517 f: +49 69 9754 4900 e: deinfo@datamonitor.com Datamonitor Hong Kong 2802-2803 Admiralty Centre Tower 1 18 Harcourt Road Hong Kong t: +852 2520 1177 f: +852 2520 1165 e: hkinfo@datamonitor.com

ABOUT DATAMONITOR
Datamonitor is a leading business information company specializing in industry analysis. Through its proprietary databases and wealth of expertise, Datamonitor provides clients with unbiased expert analysis and in depth forecasts for six industry sectors: Healthcare, Technology, Automotive, Energy, Consumer Markets, and Financial Services. The company also advises clients on the impact that new technology and eCommerce will have on their businesses. Datamonitor maintains its headquarters in London, and regional offices in New York, Frankfurt, and Hong Kong. The company serves the world's largest 5000 companies. Datamonitor's premium reports are based on primary research with industry panels and consumers. We gather information on market segmentation, market growth and pricing, competitors and products. Our experts then interpret this data to produce detailed forecasts and actionable recommendations, helping you create new business opportunities and ideas. Our series of company, industry and country profiles complements our premium products, providing top-level information on 10,000 companies, 2,500 industries and 50 countries. While they do not contain the highly detailed breakdowns found in premium reports, profiles give you the most important qualitative and quantitative summary information you need - including predictions and forecasts.

All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Datamonitor plc. The facts of this profile are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Datamonitor delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Datamonitor can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

Tesco PLC © Datamonitor Page 2

TESCO PLC
TABLE OF CONTENTS

TABLE OF CONTENTS Company Overview ....................................................... 4 Key Facts........................................................................ 4 Business Description .................................................... 5 History ............................................................................ 6 Key Employees .............................................................. 7 Major Products And Services..................................... 12 Products And Services Analysis................................ 13 SWOT Analysis ............................................................ 14 Top Competitors .......................................................... 19 Company View ............................................................. 20 Locations and Subsidiaries ........................................ 22 Latest Company Comment ......................................... 23 Latest Company News ................................................ 31

Tesco PLC © Datamonitor Page 3

TESCO PLC
Company Overview

COMPANY OVERVIEW
Tesco is the largest food retailer in UK, operating around 2,318 stores worldwide. Tesco operates around 1,878 stores throughout the UK, and also operates stores in the rest of Europe and Asia. Tesco.com is a wholly-owned subsidiary offering a complete online service, including tescodirect.com and tesco.net. The company also offers a range of both online and offline personal finance services. Tesco is headquartered in Hertfordshire, UK. For the year ended February 2004 Tesco PLC achieved revenues that totaled £33,557 million, an increase of 18.7% against the previous years revenues that were £28,280 million.

KEY FACTS

Head Office

Tesco PLC Tesco House Delamare Road Cheshunt Hertfordshire EN8 9SL United Kingdom

Phone Fax Web Address Revenues/turnover (£ Mn) Financial Year End Employees SIC Codes NAICS Codes London Ticker

+44 1992 632 222 +44 1992 630 794 http://www.tesco.co.uk 33557

February 326000 SIC 5411 Grocery Stores 44511, 44512, 44711, 45291 TSCO

Tesco PLC © Datamonitor Page 4

TESCO PLC
Business Description

BUSINESS DESCRIPTION
Tesco is one of the largest food retailers in the world, operating around 2,318 stores and employing over 326,000 people. As well as operating in the UK, it has stores in the rest of Europe and Asia. It also provides online services through its subsidiary, Tesco.com. The UK is the company’s largest market operating under four banners: Extra, Superstore, Metro and Express. Tesco sells approximately 40,000 food products in its superstores, as well as clothing and other non-food lines. The company’s own-label products are at three levels, value, normal and finest. Own brand accounts for approximately 50% of sales. As well as convenience produce, many stores have gas stations. The company has become one of Britain’s largest petrol independent retailers. Other retailing services offered in the UK include Tesco Personal Finance and Tesco.com. Tesco Personal Finance is a joint venture with the Royal Bank of Scotland. It has over 3.4 million customers, and provides various financial products and services. The company has operations in the rest of Europe, including the Republic of Ireland, Hungary, Poland, Czech Republic and Slovakia. Tesco’s Republic of Ireland business operates in the region of 82 stores, and around 60 stores in the Hungarian market. Tesco’s Polish operations include former HIT operated stores. It operates around 66 hypermarkets and supermarkets in this country. In the Czech Republic and Slovakian markets, Tesco operates 22 and 23 hypermarkets respectively. Tesco also operates stores in Asia, including Thailand, South Korea, Malaysia and Taiwan. The company operates 64 stores in Thailand and 28 stores in the South Korean Market, while in the Taiwanese and Malaysian markets it has three stores in each nation.

Tesco PLC © Datamonitor Page 5

TESCO PLC
History

HISTORY
Tesco was originated in the markets of London’s East End, where in 1914, war veteran Jack Cohen began to sell groceries. The brand name of Tesco first appeared on packets of tea in the 1920s. Tesco was an amalgamation of the initials of T.E. Stockwell, a partner in the firm of tea suppliers, and the first two letters of Cohen. The first Tesco store was founded in 1929 in Burnt Oak, Edgeware. Following the success of self service stores in the US, Mr. Cohen opened the first Tesco self-service store in St. Albans in 1948. Gradually the business expanded from stores to supermarkets, and by the early 1960s, Tesco had become a familiar household name, selling household goods and clothing. In 1974, the company set up petrol stations at its major sites, selling fuel at competitive prices. In 1979, the company’s annual turnover reached £1 billion for the first time. Throughout the 1990s, Tesco expanded even further, and continued its international expansion. In response to a growing Eastern European market, Tesco opened stores in Poland, Hungary, Slovakia and the Czech Republic. Tesco also expanded into Taiwan, Thailand and South Korea. The company purchased the UK-based T&S, a convenience retailer, while in Poland it bought HIT, a hypermarket operator, in 2002. In November 2003, the company purchased the small Turkish hypermarket chain, Kipa. The chain operated five hypermarkets in the Aegean region with reported sales in 2002 of £124 million, pre tax profit of £4.7 million and over 1,500 employees. In early 2004, the company announced that it was purchasing the family-run chain, Adminstore, which operates the Europa, Harts and Cullens grocery outlets in the London area, for £53.7 million. In April 2004, Tesco faced a hurdle in its acquisition of Adminstore, even though the Office of Fair Trading (OFT) cleared its bid, as the Federation of Wholesale Distributors (FWD) attempted to block the deal. The FWD argue that the OFT’s decision was flawed since the acquisition would make it virtually impossible for independent retailers to open new shops in central London.

Tesco PLC © Datamonitor Page 6

TESCO PLC
Key Employees

KEY EMPLOYEES

Name
David Reid Sir Terry Leahy Richard Brasher Philip Clarke Andrew Higginson David Potts Tim Mason

Job Title
Chairman CEO Commercial and Trading Director International and IT Director Finance and Strategy Director Retail and Logistics Director Marketing, Ecommerce, Property and Republic of Ireland Director

Board
Executive Board Executive Board Executive Board Executive Board Executive Board Executive Board Executive Board

Compensation

Veronique Morali Rodney Chase Charles Allen CBE E. Mervyn Davies Dr. Harold Einsmann Ken Hydon Graham Pimlott Lucy Neville-Rolfe

Non-Executive Director Deputy Chirman and Senior Non-Executive Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Company Secretary

Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Senior Management

Tesco PLC © Datamonitor Page 7

TESCO PLC
Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES
David Reid
Board: Executive Board Job Title: Chairman Since: 1985 Age: 57 David Reid became non-executive chairman in April 2004. Prior to his appointment he was deputy chairman of Tesco PLC and served on the Tesco board since 1985.

Sir Terry Leahy
Board: Executive Board Job Title: CEO Since: 1979 Age: 48 Terry Leahy became CEO in 1997. Joining Tesco in 1979, he held a number of marketing and commercial positions prior to being appointed to the board of Tesco PLC in 1992.

Richard Brasher
Board: Executive Board Job Title: Commercial and Trading Director Since: 1986 Age: 42 Richard Brasher was appointed to the board in March 2004. He joined Tesco in 1986. He has held a number of marketing, commercial and store operations positions, most recently non-food commercial director.

Philip Clarke
Board: Executive Board Job Title: International and IT Director Since: 1998 Age: 43

Tesco PLC © Datamonitor Page 8

TESCO PLC
Key Employee Biographies

Philip Clarke was appointed to the board in 1998. Prior to his appointment he held a number of roles in store operations, commercial and marketing.

Andrew Higginson
Board: Executive Board Job Title: Finance and Strategy Director Since: 1997 Age: 46 Andrew Higginson was appointed to the board in 1997. He is a member of the 100 group of finance directors, chairman of Tesco personal finance and non-executive director of C & J Clark Limited.

David Potts
Board: Executive Board Job Title: Retail and Logistics Director Since: 1998 Age: 46 David Potts was appointed to the board in 1998. He joined Tesco in 1973 and has held a number of store and head office positions. From 1997 he directed the integration of our businesses in Northern Ireland and the Republic of Ireland before returning to the UK in his current role in July 2000.

Veronique Morali
Board: Non Executive Board Job Title: Non-Executive Director Since: 2000 Age: 45 Veronique Morali was appointed a non-executive director in 2000. She is COO and director of Fimalac.

Rodney Chase
Board: Non Executive Board Job Title: Deputy Chirman and Senior Non-Executive Since: 2002 Age: 60

Tesco PLC © Datamonitor Page 9

TESCO PLC
Key Employee Biographies

Rodney Chase was appointed a non-executive director in 2002. He is also a nonexecutive director of Diageo plc and Computer Sciences Corporation.

Charles Allen CBE
Board: Non Executive Board Job Title: Non-Executive Director Since: 1999 Age: 47 Charles Allen was appointed a non-executive director in 1999. He is CEO of ITV.

E. Mervyn Davies
Board: Non Executive Board Job Title: Non-Executive Director Since: 2003 Age: 51 Mervyn Davies was appointed a non-executive director in 2003. He is group CEO of Standard Chartered.

Dr. Harold Einsmann
Board: Non Executive Board Job Title: Non-Executive Director Since: 1999 Age: 70 Dr. Harald Einsmann was appointed a non-executive director in 1999. He is a nonexecutive director of EMI Group, is on the board of Stora Enso Oyj, part of the Wallenberg Group and is a director of British American Tobacco.

Ken Hydon
Board: Non Executive Board Job Title: Non-Executive Director Since: 2004 Age: 59 Ken Hydon was appointed a non-executive director in 2004. He is the financial director of Vodafone Group, a member of the board of representatives of the Verizon

Tesco PLC © Datamonitor Page 10

TESCO PLC
Key Employee Biographies

Partnership in the USA and a non-executive director of Reckitt Benckiser.

Graham Pimlott
Board: Non Executive Board Job Title: Non-Executive Director Since: 1993 Age: 54 Graham Pimlott was appointed a non-executive director in 1993. He is a nonexecutive director of Provident Financial and chairman of Export Credit Guarantee Department. He is deputy chairman of Hammerson.

Lucy Neville-Rolfe
Board: Senior Management Job Title: Company Secretary Since: 2004 Age: 47 Lucy Neville-Rolfe was appointed company secretary in March 2004 in addition to her role as group corporate affairs director. She joined Tesco in 1997 from the cabinet office and is non-executive director of the foreign office and deputy chair of the British Retail Consortium.

Tesco PLC © Datamonitor Page 11

TESCO PLC
Major Products And Services

MAJOR PRODUCTS AND SERVICES
Tesco is the largest food retailer in UK, operating around 2,318 stores worldwide. Its products and services include: Store types: Extra Superstore Metro Express Tesco.com Store offerings: Food Retail Non-Food Retail Petrol Stations Home Living Range Tesco Personal Finance: Life Insurance Pet Insurance Home Insurance Travel Insurance Motor Insurance Savings Accounts Personal Loans Secure Investment Bonds Online Mortgage Finder

Tesco PLC © Datamonitor Page 12

TESCO PLC
Products And Services Analysis

PRODUCTS AND SERVICES ANALYSIS
For the year ended February 2004 Tesco PLC achieved revenues that totaled £33,557 million ($59,307.9 million), an increase of 18.7% against the previous year’s revenues that were £28,280 million. The company’s revenues are derived from three major geographical areas: the UK, Rest of Europe and Asia, which accounted for 73.8%, 10.1% and 8% of fiscal 2003 revenues respectively. Other revenues accounted for 8.1% of Tesco PLC’s 2003 revenues. UK Full year sales in the UK totaled £24,760 million, an increase of 16.2% against the previous year’s revenues that were £21,309 million. This year in the UK Tesco opened 21 Extras, eight new builds and 13 extensions giving the company 83 in total, devoting more space than ever to non-food. Tesco has also opened 20 Superstores, four Metros and converted 138 T&S Stores to the Express convenience format. REST OF EUROPE Full year sales in the UK totaled £3,385 million, an increase of 27.1% against the previous year’s revenues that were £2,664 million. Tesco is the leading hypermarket retailer in four out of five European markets, serving three million customers a week and employing 41,000 people. In fiscal 2003 Tesco opened 22 stores in Central Europe. ASIA Full year sales in the UK totaled £2,669 million, an increase of 31.4% against the previous year’s revenues that were £2,031 million. In Asia, Tesco has over 50 hypermarkets, employing more than 24,000 people. Its largest market is Thailand, where it is the market leader with 35 stores. In fiscal 2003 Tesco have opened 22 stores in Asia.

Tesco PLC © Datamonitor Page 13

TESCO PLC
SWOT Analysis

SWOT ANALYSIS
Tesco PLC is a major food retailer that operates primarily in the United Kingdom. The company operates 2,291 supermarkets, superstores and convenience stores in the United Kingdom, the rest of Europe and Asia. The company also offers financial products, such as insurance and banking services, as well as electrical appliances and telecommunication products.

Strengths
Increasing market share Insurance Tesco online Brand value UK market leadership reinforced

Weaknesses
Reliance upon the UK market Debt reduction Signs point to serial acquisitions

Opportunities
Non-food retail Health and beauty Further international growth

Threats
UK structural change could spark a price war Overseas returns could fall Wal-Mart/Asda challenge International expansion

Strengths
Increasing market share Tesco holds a 13% share of the UK retail market. Its multi-format capability means that it will continue to grow share in food, while increasing space contribution from hypermarkets will allow it to drive a higher share in non-food. Tesco’s general growth and ROI show no sign of abating. In the UK, Tesco’s late 2002 investment into West-midlands based convenience store group T&S was billed as the most aggressive move into the neighborhood market by a big-name retailer so far. The deal has turned Tesco into the country’s second biggest convenience store chain after the Co-operative Group, and the company also plans to open up 59 new stores

Tesco PLC © Datamonitor Page 14

TESCO PLC
SWOT Analysis

in the UK this year. Tesco has grown its non-food division to the extent that its revenues now total 23% of total group earnings. Tesco’s international business segment is growing steadily, and is predicted to contribute nearly a quarter of group profits over the next five years. If geographical spread continues to grow, this will ensure Tesco’s continued regional strength. Insurance In fiscal 2003 Tesco Personal Finance reached the milestone of one million motor insurance policies, making it the fastest growing motor insurance provider ever. The group’s instant travel insurance allows Clubcard holders to buy their holiday insurance conveniently at the checkout. Pet insurance now has over 330,000 cats and dogs covered, while the life insurance policy followed on from the success of last year, when it was voted The Most Competitive Life Insurance Provider in the MoneyFacts Awards 2003. Tesco online Tesco.com is the world’s biggest online supermarket and this year the group had sales of over £577 million, an increase of 29% on last year. Tesco online now operates in over 270 stores around the country, covering 96% of the UK. With over a million households nationwide having used the company’s online services, the company has a strong platform to further develop this revenue stream. Brand value Profits for Tesco’s operations in Europe, Asia and Ireland increased by 78% during the last fiscal year. The company has a strong brand image, and is associated with good quality, trustworthy goods that represent excellent value. Tesco’s innovative ways of improving the customer shopping experience, as well as its efforts to branch out into finance and insurance have also capitalized on this. UK market leadership reinforced Since acquiring number one ranking in 1996, Tesco has developed a successful multiformat strategy that has accelerated its advantage. Its UK sales are now 71% larger than Sainsbury’s. Also the Competition Commission’s report makes it very difficult for a competitor to challenge its scale and has effectively scuppered Wal-Mart’s chances of stealing UK leadership. Therefore, Tesco is in an enormously strong position in its domestic market.

Tesco PLC © Datamonitor Page 15

TESCO PLC
SWOT Analysis

Weaknesses
Reliance upon the UK market Although international business is still growing, and is expected to contribute greater amounts to Tesco’s profits over the next few years, the company is still highly dependent on the UK market (73.8% of 2003 revenues). While this isn’t a major weakness in the short term, any changes in the UK supermarket industry over the next year for example, like the Morrison’s group successfully purchasing the Safeway chain could alter the balance of UK supermarket power, and affect share. Debt reduction Tesco is not expected to reduce its debt until at least 2006. Tesco has a large capital expenditure program mainly due to its huge investment in space for new stores. Since its expansion is so aggressive, Tesco has little free cash for any other operations. Signs point to serial acquisitions With an enterprise value of £23 billion, Tesco clearly has enormous firepower. Also, its product range is vast and almost any acquisition can be justified, particularly in the UK. While ’fill the gap’ strategy would be useful to the company, as has been the case with the UK convenience market, there is the danger of Tesco becoming a serial acquirer, as this tends to reduce earnings visibility and quality.

Opportunities
Non-food retail The growth in Tesco’s hypermarket format in the UK means that there are expectations of seeing its 13% share of retail sales climb sharply over the next few years. It can use its footfall and low cost structure together with improved merchandising skills to add another leg to growth. Equally, its growth overseas will further increase earnings and scale, taking Tesco onto the virtuous circle of growth. It is estimated that Tesco’s non-food sales will double over the next four years. Worldwide it has sales of £7 billion in non-food, some 23% of the total. Its aim to be ’as strong in non-food as we are in food’, no longer sounds like the consultancy-speak that it once did, and they are getting there using the basic tenets of value, choice and convenience that have been so successful in food. Around half of new space opened in the UK last year was for non-food and the result has been to increase its market

Tesco PLC © Datamonitor Page 16

TESCO PLC
SWOT Analysis

share from 5% to 6% and its overall share of UK retail sales has increased by 100 basis points to 12.8%. The company’s telecoms venture is the latest stage in its strategy to develop popular retail services. It has repeated its approach in banking, by capitalizing on its brand. Health and beauty Tesco’s UK health and beauty ranges continue to grow, and it is currently the fastest growing skincare retailer in the market. The company has a volume market-leading position in both toiletries and healthcare and is number one retailer in the baby goods markets. Across all health and beauty ranges Tesco continues to invest in price to deliver the value customers have come to expect and this year invested £27 million on health and beauty pricing alone. The company now has 19 stores with opticians and nearly 200 stores with pharmacies. Further international growth Tesco now operates in six countries in Europe in addition to the UK; the Republic of Ireland, Hungary, Czech Republic, Slovakia, Turkey and Poland. It also operates in Asia: in South Korea, Thailand, Malaysia, Japan and Taiwan. Seven years ago, its International sales were £770 million. Now, they are nearly 10 times larger, at almost £7 billion, with profits of £306 million. In the current year, Tesco will add 2.5 million square feet to sales area and could well enter another major market. Growing internationally has forced Tesco to become serious about hypermarkets and this has had seriously positive implications for growth in the UK. Tesco has formed a strategic relationship with US supermarket, Safeway Inc, to take the tesco.com home shopping model to the US. Telecoms is the latest stage in its strategy to develop popular retail services. It has repeated its approach in banking, by capitalizing on its brand.

Threats
UK structural change could spark a price war The price followers in the UK market are about to become aggressive investors in price, Safeway because of new ownership and Sainsbury because of new management. Morrison is reducing Safeway’s prices by up to 6% and Sainsbury is bound to see lower prices as one of the basic changes necessary to drive its recovery. With both Asda and Tesco committed to price leadership, this could result in a step down in industry profitability.

Tesco PLC © Datamonitor Page 17

TESCO PLC
SWOT Analysis

Overseas returns could fall The buy case for Tesco is predicated around investment overseas driving higher group returns as each country moves past critical mass. This might not happen, either because of economic conditions, competitor action, or failure in Tesco’s business model. It also could come as a consequence of an aggressive move into a larger market, such as China or Japan. Wal-Mart/Asda challenge Since the US shopping giant Wal-mart purchased Asda, Tesco’s rank as the top UK supermarket has been threatened. Asda can now compete extremely well on price and range of goods. For the moment, Asda is the third largest supermarket in the UK, just behind Sainsbury’s and then Tesco. However, Asda closed the gap on Sainsbury’s in 2003, leaving the company to directly challenge Tesco’s dominance. Tesco is well aware of this, and has so far been quick to keep up with price cuts or special offers at Asda. Wal-mart may also decide to wield its buying power more heavily in the UK, and this could spell the end of Tesco’s brand dominance in the future. International expansion International growth is expensive. Entering new markets with a new brand requires heavy investment and marketing, as well as land prices (which are currently low) and extra distribution and operation expense. Tesco’s debt may increase before it begins to decline. Korea is contributing a good proportion of Tesco’s international profit growth. If profits continue to grow in this way, Korea will probably represent one-third of Tesco’s international profits in 2003/4. Korean consumer spending is currently quite low, and coupled with the country’s current unrest, and Tesco’s large investment, this represents a high risk area for Tesco to bank on.

Tesco PLC © Datamonitor Page 18

TESCO PLC
Top Competitors

TOP COMPETITORS
The following companies are the major competitors of Tesco PLC: ASDA Group Limited BP Plc Carrefour S.A. ExxonMobil Corporation The Big Food Group Plc J Sainsbury plc Marks and Spencer Group plc Royal Dutch/Shell Group Safeway Inc. Safeway plc Somerfield SPAR Handels-Aktiengesellschaft The Boots Group PLC Wm Morrison Supermarkets PLC Booker Cash & Carry Limited ALDI Group The Carphone Warehouse Group PLC John Lewis Partnership plc

Tesco PLC © Datamonitor Page 19

TESCO PLC
Company View

COMPANY VIEW
The following is a statement by David Reid, chairman of Tesco. This has been taken from the company’s 2004 Annual Report: I am pleased to report that this year the Tesco group has again delivered an excellent set of results. I believe they reflect the strength of the Tesco strategy and the team’s ability to focus and execute well. For the full year on a 53 week basis, Group sales have risen by 18.7% to £33.6 billion and underlying pre-tax profit is up 21.9% to £1,708 million. Over the same period, pretax profit on a statutory basis is up 17.6% to £1,600 million. Earnings per share is 16.31p, up 16.7%. The Board proposes a final dividend of 4.77p, up 10.2% on last year. This, together with the interim dividend of 2.07p, gives a full year dividend of 6.84p, up 10.3%. Our growth has again been driven by delivering a great shopping trip for customers wherever we operate. We have seen an exceptional performance in the UK this year, reflecting our investment in lower prices and all round customer offer. Non-food is now a scale business, it goes from strength to strength, increasing the attractiveness of our stores in the UK and is also a key feature of our international hypermarkets. Retailing services, with Tesco Personal Finance in the forefront, has had a very strong year. Our international business has achieved another year of strong growth in sales, profits and market share gains. We are delivering in all areas of our business. We have strong momentum and there is more to come. I would like to thank each of the 326,000 employees in the Group for their contribution. Our people are the key to delivering for customers and our results reflect the excellent work of our staff at all levels. They will receive a record £148 million in profit share this year. Our expansion program will create more than 20,000 new jobs at home and abroad.

Tesco PLC © Datamonitor Page 20

TESCO PLC
Company View

BOARD CHANGES Tesco have a good track record of well-planned succession. This year has seen a number of changes to the Board. Rowley Ager Company Secretary andm John Gildersleeve Commercial and Trading Director have both retired, we thank them both for their contribution and wish them well after many years of loyal service. I am pleased to announce that Richard Brasher has joined the Board as Commercial and Trading Director and Lucy Neville-Rolfe has been appointed as our new Company Secretary. I have taken over Non-executive Chairmanship from John Gardiner. On behalf of the Board, I thank him for 16 years service and wish him well in his retirement. We have also announced that Mervyn Davies CEO of Standard Chartered, and Ken Hydon Financial Director at Vodafone have joined the Board as Non-executive Directors. Looking ahead, next year will be as competitive as ever and we have an excellent plan to improve the shopping trip for our customers, particularly in light of the changes in the UK industry. Tesco welcomes new challenges and competition and we believe we will continue to deliver the best shopping experience for our customers.

Tesco PLC © Datamonitor Page 21

TESCO PLC
Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES
Head Office
Tesco PLC Tesco House Delamare Road Cheshunt Hertfordshire EN8 9SL United Kingdom P: 44 1992 632 222 F: 44 1992 630 794 www.tesco.co.uk

Other Locations and Subsidiaries

Tesco Distribution Ltd. Tesco House Delamare Road Cheshunt Hertfordshire EN8 9SL United Kingdom

T&S Stores PLC Apex Road Brownhills Walsall West Midlands WS8 7TS United Kingdom P: 44 1543 363 000 F: 44 1543 363 114 www.tands.co.uk

Tesco PLC © Datamonitor Page 22

TESCO PLC
Latest Company Comment

LATEST COMPANY COMMENT
Tesco: no frills legal services
24/06/2004 UK retailer Tesco has launched a legal services website. Under new government proposals, non-legal companies are to be given the right to sell legal services. If retailers such as Tesco [TSCO.L] are subsequently granted permission to offer specialist advice as well as basic legal products, solicitors will have to rethink their marketing strategies to compete in terms of advertising and brand awareness. Tesco launched an online legal store this week, offering customers DIY divorce kits, letting agreements and wills, making basic legal services available to millions of people who at present do not use them. Under current regulations, Tesco will be unable to develop this offering further and offer specialist legal advice to customers itself, but must instead refer them to Law Society regulated solicitors. However it can sell basic products such as the divorce kit. But this could soon change following the Clementi review into the ownership rules governing law firms. Under the proposals traditional legal services will be able to combine with other professions, allowing non-legal companies to operate their own law firms. This has long been touted as the ’Tesco Law’ model, allowing cheap and straightforward access to justice. Tesco’s initial moves have therefore ironically taken this model a step closer to reality. Retailers have already successfully stretched their brands into other industry sectors in order to extend their product offering and cement customer relationships. For example, insurance products such as motor and household cover are now widely offered by supermarkets. Parallels could indeed be drawn between the insurance and legal sectors. Arguably, with few exceptions, neither has managed to establish successful brands, both lack a consumer-friendly reputation, and traditionally consumers have used both with a degree of mistrust.

Tesco PLC © Datamonitor Page 23

TESCO PLC
Latest Company Comment

However, the legal profession is not as equipped as the insurance sector to defend itself. Unlike insurance companies, the legal sector has not yet been swept by merger and acquisition fever, and therefore lacks players of sufficient size to really make an impact on the consumer. Furthermore, it simply does not have advertising budgets large enough to compete effectively with retailers for consumer awareness. Some solicitors may view the entrance of these players as an opportunity rather than a threat, providing solicitors with partnership and distribution opportunities. Above all, solicitors must wake up to the fact that these changes mark a wholesale shift in the way legal services are provided.

Tesco: Hungary to get more petrol stations
14/05/2004 Tesco’s Hungarian subsidiary has opened its second discount petrol station. Tesco [TSCO.L] is starting to flex its muscles in the Hungarian fuel retailing market with the opening of a second discount petrol station. Building on its existing reputation as a food retailer in the market and its fuel retailing success in the UK, it’s certainly strong enough to make its mark. Hungarian retail chain Tesco Global Rt, a subsidiary of the UK retailer Tesco, has opened its second petrol station at a site in Veszprem, western Hungary. This follows the launch of the country’s first ever combined supermarket and petrol station at a 24 hour Tesco Megapark in March of this year. Motorists using the new Tesco petrol stations can purchase discounted fuel daily from 6am to midnight, paying 5 Hungarian forints (E0.02) less than at other major filling stations. These aren’t the first cases of petrol stations on Tesco sites in Hungary. The retail chain, KlubPetrol, opened a pilot station outside of a Tesco store in 2002. However, following the success of the independent forecourt concept in the UK, Tesco decided to go it alone. To date, it looks as though it is making successful strategy decisions in the Hungarian market. Tesco Global reported an increase in 2003 sales of 26% over the previous year. With 34 convenience stores and 27 supermarkets equating to a 13% share, the company is now a market leader in the food retailing segment. Prompted by this success, competition is already looming in the shape of French supermarket chain Auchan. Auchan is looking to match Tesco’s sales growth in the country, and is looking at following Tesco’s example by opening its own petrol stations.

Tesco PLC © Datamonitor Page 24

TESCO PLC
Latest Company Comment

Over 2004, Tesco is expected to complement experiments with smaller convenience store formats with the opening of more discount petrol stations next to both new and existing stores. The plan is to open 8 new petrol stations, with the third expected at Gyor. However, with a license to build a petrol station at all of its 61 existing stores already in place, Tesco certainly has the scope to expand more rapidly if, as seems likely, the concept proves successful.

Tesco: trim trolleys
28/04/2004 UK supermarket Tesco is trialing an innovative new trolley design. Tesco’s {TSCO.L] new Trim Trolley allows consumers to exercise while they shop by offering differing resistance when pushing and counting the calories they burn as they go round the store. This innovative approach to shopping could boost sales of low-fat, low-carb or other diet products, but equally consumers may reward themselves for their efforts with extra cakes, sweets and chocolate... The glut of low-fat, low carb and other diet options on supermarkets shelves is clear evidence that today’s shoppers are at least conscious of the need to think about their weight as they choose their daily shopping. In fact, the high visibility of healthy eating products probably prompts consumers to think about their waistlines as they shop. But now, thanks to German firm Wanzl, shoppers will be able to take more affirmative action than simply buying more low-carb snacks. The Trim Trolley comes equipped with a pulse monitor, timer and various other gadgets which would not be out of place on a gym treadmill. And to make sure shoppers are getting all the exercise they can, the trolleys have a variable resistance, making them harder to push around the store. The Trim Trolley may seem an outlandish idea, but it reflects a number of trends in modern life. Firstly, the concern over diet and exercise, prompted by the growing levels of obesity in the West. But at the same time, many consumers find that their lives are too full and complicated to allow them to live the healthy lifestyle they crave. Addressing these concerns, the Trim Trolley allows consumers to squeeze in exercise during the course of an ordinary week. While the idea has some drawbacks (ordinarily, trolleys which are harder to push are seen as a problem, not an exercise opportunity) it will be interesting to see

Tesco PLC © Datamonitor Page 25

TESCO PLC
Latest Company Comment

consumers’ reaction to them. Specifically, it is difficult to predict the effect on sales of "unhealthy" items such as sweets, crisps and carbonated drinks. For some, the virtue of exercise may have knock-on effects on purchases, leading to greater sales of healthy eating products. For others, though, the knowledge that the very act of pushing a six-pack of cola and a slab of chocolate to the till burns off half a calorie may act as a justification for buying them.

Tesco: record profits
20/04/2004 Tesco has announced record annual profits of GBP1.6 billion. Tesco’s [TSCO.L] profits increased by 17.6% for the year to February 28, 2004, largely due to a boost from international, Internet and non-food sector sales. However, high levels of competition have sparked price wars that will impact on next year’s profits. Whilst a benefit for consumers in the short-term, in the longer-term price wars could give large players, like Tesco, increased market power. Supermarket giant Tesco now holds an estimated 27% share of the UK grocery market, moving it even further ahead of nearest rivals Asda and Sainsbury. The group’s record annual profit of GBP1.6 billion was largely boosted by a sales increase of 18.7% to GBP33.6 billion. Much of this increase was a result of international sales and Internet sales, both of which grew by 29%. Non-food is also a key area of growth for Tesco, for example, it now sells more baby goods than Boots and Mothercare combined. The group’s 2005 profits could be hampered by the price wars that have recently been sparked by the close competition in the UK market. Tesco announced GBP70 million of price cuts last week, following on from Asda’s GBP65 million cuts a few weeks before. Morrison’s recent takeover of Safeway creates a fourth major player in the market and is likely to result in further price wars as the top three attempt to draw custom away from Morrison’s converted Safeway stores. High levels of competition are likely to benefit consumers through reduced prices, though the growing strength of Tesco enables it to undercut competitors’ prices and create an extensive number of loss leaders subsidized by other lines. An extensive price war is likely to put smaller chains and independent competitors out of business, or make them vulnerable to takeovers. While the Competition Commission is likely to restrict Tesco from any large-scale takeovers, a gradual improvement in market share will steadily increase Tesco’s power, which is of more questionable benefit for

Tesco PLC © Datamonitor Page 26

TESCO PLC
Latest Company Comment

consumers. UK regulators believe that a supermarket should not account for more than 25% of a national market, so Tesco’s dominance in this field could soon come under fire, despite claims by Tesco that its popularity is due to consumer choice.

Tesco: Fairtrade fever
02/03/2004 Tesco has launched a new own-label Fairtrade range. Coinciding with the beginning of Fairtrade fortnight, Tesco [TSCO.L] has launched a Fairtrade grocery range of 15 products. This move by the UK’s leading supermarket highlights the growing consumer demand for higher ethical standards from retailers and producers. With the strength of the Tesco brand behind it, the ethical consumerism trend in the UK looks set to become firmly established. Tesco’s 15 product Fairtrade range, which includes orange juice, cookies, coffee, tea, chocolate and South African wine, has been developed in conjunction with the Fairtrade Foundation. There will also be Fairtrade fresh produce including mangos, bananas, plums, grapes, apples, oranges and lemons. Also, for the first time in the UK, Fairtrade flowers will go on sale under Tesco’s own label and will include mixed and luxury roses from Kenya. The launch will take the total number of Fairtrade products available in Tesco to 60 as the supermarket will continue to stock other Fairtrade brands such as Cafdirect, Clipper and Divine. Tesco will support Fairtrade Fortnight by promoting the new range with in-store tastings, promotional offers and information on Fairtrade. It is likely that the new range will particularly appeal to middle-aged professionals, as those on high incomes tend to be the most active ethical consumers. As with organic food and drinks, affluence has a strong influence on consumers’ willingness to buy ethically. Consumers are increasingly seeking to derive not only functional benefits but also ’feel good’ emotional benefits from the products they consume. Recent statistics from the Fairtrade Federation highlight that sales of Fairtrade products - aimed at giving developing world farmers a fair financial return for their labors - have increased by 46% in the last year to GBP92 million.

Tesco PLC © Datamonitor Page 27

TESCO PLC
Latest Company Comment

There is mounting pressure on businesses in all sectors to act with, or at least present an image of, corporate social responsibility (CSR). This means that companies are more willing to provide products and services that fit in with and reflect the lifestyle and ethical choices that consumers wish to make. Tesco’s launch illustrates that Fairtrade is becoming more established in the mainstream and with the UK’s largest retailer throwing its marketing muscle behind the trend it can only become more popular.

Tibbett & Britten: Czech mate with Tesco
29/08/2003 Tibbett & Britten is to serve all of Tesco’s chilled distribution needs in the Czech Republic. Tibbett & Britten [TBG.l] is expanding its relationship with Tesco, providing its cold chain distribution in the Czech Republic. The British based supermarket group is a leading player in Central Europe, and the contract win will provide a big boost for T&B as it builds its presence in this promising region. International logistics specialist Tibbett & Britten’s contract with Tesco Stores CR will see the UK based logistics company set up a central warehousing and distribution operation at its existing chilled and frozen food distribution center in eastern Prague. T&B has recruited 60 additional staff to handle the extra volume, eventually expected to be around 70,000 pallets a year, and representing 700 different stock lines (rising to 1,100 in September). Transport to all 19 Tesco stores throughout the Czech Republic will be outsourced under the management of T&B. The dominant grocery retailer in the UK, Tesco has also pursued growth in overseas markets, and has been present in the Czech Republic since 1996. Tesco is now one of the leading supermarket chains in Central Europe and the region’s largest hypermarket retailer. As such, it represents an important client for T&B, which has operated in the Czech Republic since 1998 and focuses heavily on the consumer goods and retail sectors. T&B already provides logistics support for the retailer in the UK and Hungary. T&B’s presence in the Czech market is based mainly in the Prague and Brno regions, in the west and east of the country respectively. The company’s other major clients in the country include Henkel, Beiersdorf and Kimberly-Clark.

Tesco PLC © Datamonitor Page 28

TESCO PLC
Latest Company Comment

For logistics companies, the Czech Republic offers much potential as a growth market. With a population of over 10 million people and steady economic growth driven by growing domestic demand as well as exports, the country has seen foreign direct investment more than double between 2000-2002 as Western European retail and consumer goods companies, among others, have entered. This activity has fuelled an increased demand for logistics solutions, and the country’s expected accession to the EU next year should only serve to accelerate this growth.

Tesco: a flurry of activity
18/08/2003 Tesco is pressing ahead with plans to test a new stock tagging system in the UK. The last week has seen UK retailer Tesco [TSCO.L] attract a foray of media attention for its plans to introduce a controversial stock tagging system. Aside from this the retailer is embarking on further activities, which if successful will further help to assert its position as the UK’s leading retailer. Tesco is continuing with plans to test a controversial new stock tagging system in the UK, but has been criticized by some consumer groups for its infringement on shoppers’ privacy. A microchip the size of a grain of sand is attached to each product and when a customer removes that product from a display an in-store CCTV camera is triggered. The system has already been dubbed the ’Big Brother’ anti-theft system with critics asserting that the chips, known as RFID tags, could be used to track products even after they left the store. Tesco has moved to counter such claims by insisting that the CCTV images are destroyed once a product passes through the checkout and is paid for. Civil liberties campaigners have criticized the experiment and protested outside the Cambridge supermarket where it is being carried out. They described the pilot as an infringement of privacy and called on shoppers to boycott the chain until it drops the idea. Aside from the PR frenzy, Tesco has also been busy redesigning its entire Value range, replacing the somewhat outdated and uninspiring blue and white striped packaging with product images. Tesco decided to change the brand’s look after consulting with customers who said they were tired of the plain packaging. The GBP500,000 project is hoped to bring the brand up-to-date.

Tesco PLC © Datamonitor Page 29

TESCO PLC
Latest Company Comment

In addition, Tesco is extending its digital in-store advertising trial of ’Tesco TV’ to a further three stores this autumn, taking the total to six stores. Depending on customer feedback, a decision will be made in January on whether to roll out ’Tesco TV’ to 300 stores next year. All three activities demonstrate the type of approach that has contributed to Tesco’s market leadership in the UK. The smallest of innovations can help maintain consumer interest in brands, and the fact the retailer is constantly listening and acting upon consumer feedback should help to contribute to success in its latest ventures.

Tesco PLC © Datamonitor Page 30

TESCO PLC
Latest Company News

LATEST COMPANY NEWS
Tesco to sell Dillons newsagents
26/07/2004 UK retail giant Tesco is to sell Dillon, the 180 strong newsagents chain, in a GBP20 million deal. The company acquired Dillon in 2002 as part of its purchase of T&S Stores. Although it has been converting most of the T&S Stores into Tesco Express outlets, the company is believed to have wanted to shed Dillons for some time. Although it has yet to confirm who is to buy the newsagents, Tesco is expected to sell the stores to TM Retail, a private operator of convenience stores and one of the UK’s largest owners of newsagents. It currently owns the Martin’s and Forbuoys chains. As reported on business.scotsman.com, a Tesco spokeswoman commented: "It is no secret that we have been looking for the right purchaser of the Dillons stores since the T&S acquisition. In terms of deals, when we have something to say we will say it."

Tesco to relocate 420 support jobs to India
23/07/2004 UK grocery retailer Tesco is to move 420 of its support jobs to Bangalore in India. The move will affect support staff at the company’s Cardiff, Dundee and Welwyn Garden City locations. The company said it would be offering alternative jobs within Tesco for its UK support staff, as long as they were flexible. It commented that last year it cut 350 jobs around the UK, but found alternative roles within the company for 70% of these. Tesco is the latest in a number of UK companies to relocate their support operations to India. Companies such as BT and Norwich Union have been lured to the country because of its relatively cheap, high educated workforce who speak good English. Trade Unions in the UK are increasingly protesting at the number of companies relocating staff to India. Up to 200,000 jobs are expected to be transferred to India in the next few years, analysts have predicted.

Tesco PLC © Datamonitor Page 31

TESCO PLC
Latest Company News

Tesco core UK food aids growth
18/06/2004 UK grocer Tesco has reported a 12.3% increase in its first quarter results, with UK sales up 11.1%. International sales were also up on the same period last year, by 24%. The company noted that currency impact, due to the strong pound, resulted in sterling sales being up 18%. Although the company’s non-food business saw deflated profits due to continued price cuts, Tesco stated its clothing line has performed well, with a recent clothing sale selling two and a half times more items than in the same period last year. Chief Executive of Tesco, Terry Leahy said: "I am particularly pleased that our core UK food business has continued to grow market share and to perform very strongly in the first quarter." Tesco is currently undertaking a four-part strategy to help aid growth. This includes winning in the core UK through its inclusive offer; growing non food market share; being innovative in retailing services; and growing its international business, gaining market share.

Tesco expands Japanese operations
27/04/2004 UK grocery retailer Tesco is to expand its Japanese business by acquiring Frec’s supermarket business through its Japanese subsidiary, C Two Network Co. (C2). Fre’c operates mainly in the Greater Tokyo area. Frec’s is a privately owned company which operates supermarket chains in Japan with a particular focus on fresh food. It had revenues of Y28 billion in 2003. The company commented that the deal, which is being coordinated by the Industrial Revitalisation Corporation of Japan, would give C2 access to stores that complement the store size and location of its existing chain. C2 is to assume net debt of approximately JPY 3.0 billion belonging to Frec’s, which owns 27 stores in the Greater Tokyo area. The deal is expected to complete in August

Tesco PLC © Datamonitor Page 32

TESCO PLC
Latest Company News

2004 and will be funded from C2’s existing financial resources. Tesco acquired the C2 chain in July 2003. The new acquisition will add to the 77 stores it already operates in the Tokyo metropolitan area.

Tesco reports 18.7% sales growth
20/04/2004 UK retailer Tesco has reported an 18.7% increase in its annual sales, boosted by an increase in its non-food market share. Within its home market of the UK, Tesco reported sales growth of 14.2%, including 6.6% like for like volume, contributing to 29% volume growth in the last five years. The company commented the market has been one of its strongest in recent times. Internationally, Tesco’s sales increased by 29%, while its profits grew by 44%. Operating margins increased from 4.5% in 2002 to 5.1%. Terry Leahy, Chief Executive, commented: "Today’s figures demonstrate what a great British success Tesco is at home and abroad. The last year has been an exciting time for retail and a great year for Tesco. Sales in our core UK market have grown by more than 14%. We have seen a step change in non-food with an increase in market share. Our retail services are helping us to grow profits strongly by giving our customers choice and value. Internationally we have grown profits by an impressive 44%."

Tesco purchases Adminstore
22/01/2004 UK retailer Tesco has purchased Adminstore, a chain of convenience stores based in London. The company paid £53.7 million for the chain. Tesco is to rebrand the stores, which currently operate under the Europa, Harts and Cullens brands, as Tesco Express outlets. The purchase of Adminstore will boost Tesco’s share of the fragmented convenience store marketed, of which it has less than a 6% share. The market is currently dominated by the Co-operative group, which owns such outlets as the Alldays chain. Commenting on the purchase, Jitu Patel, managing director of Adminstore, said: "This

Tesco PLC © Datamonitor Page 33

TESCO PLC
Latest Company News

is good news for us. We have built a successful business and our stores are well located for delivering convenience to customers."

Tesco plays Santa to job seekers
26/09/2003 UK supermarket giant Tesco [TSCO.L] is set to recruit 12,000 extra staff for the busy Christmas period. The UK’s largest supermarket chain, which already employs 220,000 staff, has increased its temporary Christmas employee intake to help cope with seasonal consumer demands. The new staff will be employed throughout the UK, across 780 stores, with more jobs being created both behind the scenes and on the shop floor to support the company’s round-the-clock operations. In particular the company said it aims to increase the number of checkout staff, bagpackers, customer service staff, stock replenishment staff and dot.com pickers.

Tesco slashes prices and launches phone service
02/09/2003 Tesco [TSCO.L] has cut prices by GBP60 million across hundreds of products in its 780 UK stores. The latest promotion will see the price of some items falling by as much as 46%, while the average reduction will be 12%. Reductions cover every area of the store including ready meals, fruit and vegetables, meat, snacks, wine, health and beauty, homewares and toys. Announcing the price cuts, Tesco director Tim Mason said: "Everyone wants to save money on their weekly shop. Customers vote with their feet and we’re committed to continuing to win customers by cutting prices and helping them spend less every day. In a separate move, the supermarket giant is rolling out a range of phone tariffs, branded Tesco Talk. The company claims that BT phone users could save up to 30% on their monthly home phone calls by switching to Tesco Talk.

Tesco PLC © Datamonitor Page 34

Similar Documents

Premium Essay

Tesco Plc Value Analysis

...Tesco is known to many US investors. In this analysis I will attempt to outline the key dynamics of this company and demonstrate why I consider it to be an excellent investment at the current market price. Readers should be aware that I have been a shareholder in Tesco PLC since 2006. In addition, since this analysis has been written for the Gurufocus value ideas competition there may be some unconscious element of positive bias, even though I have attempted to be objective. Therefore I would strongly advise investors to do their own further research before investing in this company. Tesco is listed on the London Stock Exchange, stock code TSCO, and is also available on the US market as an ADR, stock code TSCDY. At the time of writing this article the share price in London was 395 pence and $19.59 for the ADR in the US. The Business Tesco PLC is the largest retailer in the UK and its core business is large format stores for food and other convenience items. In addition the company offers telecoms services such as mobile and broadband to UK customers as well as financial services including household and car insurance, personal loans and credit cards. In 2009/2010 the company achieved 31% of total sales in international markets. The market cap is 31.7 billion pounds (US$51.83 billion) and Tesco is now the world's third largest retailer behind Wal-Mart (first) and Carrefour of France. In the UK it has been reported that one out of every eight pounds spent in retail stores...

Words: 4676 - Pages: 19

Premium Essay

Tesco Plc

...Describe how the cinema can use market Market Research Report To: AMK Line manager From: Emmanuel Umana (Marketing Consultant) Date: 17/12/13 Ref: STU/AMK/Unit3 1.0 Terms of reference I work for a professional organization for marketers. One of the activities that the organization undertakes is to evaluate the marketing activites of different companies and produce a list of ‘A’ – classed marketers. 2. 0 Findings This is the largest section and contains most of your information. In it, you will present your research findings to the reader. You need to organise the information into smaller subsections, and give these sections a heading. Make sure the information flows logically from one section to the next. 3. Conclusion You must not introduce any new information here. You should pull together the main points of the report in a brief summary, and emphasise the most significant points. You should link your conclusion back to the purpose of the report which you stated in your introduction. 4. Recommendations This is where you have a chance to suggest how things could be improved or progressed. Your recommendations must flow logically from your conclusions, so that the reader can see the basis for your suggestions. Recommendations can be listed and numbered. Make sure your recommendations are realistic! 5. References/Bibliography A reference list tells the reader all the sources you have referred to in your report. A bibliography tells the reader all...

Words: 483 - Pages: 2

Premium Essay

Logistics at Tesco Plc

...Tesco 1 Tesco in the past. Brief comany history 1919: The first market was opened by Jack Cohen in the East End of London. 1924: The first own-brand product sold by Jack was Tesco Tea – before the company was called Tesco. The name comes from the initials of TE Stockwell, who was a partner in the firm of tea suppliers, and CO from Jack’s surname. 1929: Jack Cohen opens his first Tesco store in North London. 1960: Tesco takes over a chain of 212 stores in the North of England. 1961: Tesco Leicester enters the Guinness Book of Records as the largest store in Europe. 1994: The first Tesco Express opens. Tesco becomes the first retailer to offer customers a service commitment at the checkouts through “One in Front”. 1995: Tesco becomes the market-leading food retailer, enters Hungary and launches Clubcard. Tesco enters Poland, Slovakia and the Czech Republic in 1996, Taiwan and Thailand in 1998, Malaysia in 2002, Turkey and Japan in 2003. 2000: tesco.com is launched. 2004: Tesco enters China and launches own-brand Fair-trade range. 2005: Tesco exits the Taiwanese market in an asset swap deal with Carrefour involving stores and operations in the Czech Republic. 2 The present: Tesco plc. Founded in 1919 in London, Tesco plc is a British-based international grocery and general merchandising retail chain. With revenues of £67 billion (2011), it is the largest British retailer by both global sales and domestic market share, with...

Words: 3131 - Pages: 13

Premium Essay

Strategic Marketing in Tesco Plc

...Strategic marketing in Tesco Plc  Executive summary Tesco is one of the biggest names in retail and deals in a wide variety of products and services. By its effective marketing strategies it has been a great success and has been able to maintain its leadership position. The report aims at examining the strategic marketing of Tesco and seeks to find the ways in which it has been able to maintain its leadership position. In order to get suitable and reliable information of the operations of the company, secondary data from the company’s website, scholarly articles, reports, etc have been utilized. The report also uses various strategic analysis tools like PESTLE analysis and SWOT analysis to access the competitive position of the company and its internal as well as external environment. It has a strong leadership position in retail and its low cost strategy has been a great success to attract more number of customers. It has also operations in other countries where it has emerged successful by adapting to localization techniques. It is recommended for the organization to increase its international presence in order to derive more growth and profitability. This report highlights the strategic marketing of Tesco and the ways in which it has created a leadership position in the extremely competitive market and industry in which it operates. The market position of Tesco has also been accessed by the use of different strategic tools like SWOT analysis and PESTLE analysis. ...

Words: 3771 - Pages: 16

Premium Essay

Tesco Plc Value Analysis

...Tesco is known to many US investors. In this analysis I will attempt to outline the key dynamics of this company and demonstrate why I consider it to be an excellent investment at the current market price. Readers should be aware that I have been a shareholder in Tesco PLC since 2006. In addition, since this analysis has been written for the Gurufocus value ideas competition there may be some unconscious element of positive bias, even though I have attempted to be objective. Therefore I would strongly advise investors to do their own further research before investing in this company. Tesco is listed on the London Stock Exchange, stock code TSCO, and is also available on the US market as an ADR, stock code TSCDY. At the time of writing this article the share price in London was 395 pence and $19.59 for the ADR in the US. The Business Tesco PLC is the largest retailer in the UK and its core business is large format stores for food and other convenience items. In addition the company offers telecoms services such as mobile and broadband to UK customers as well as financial services including household and car insurance, personal loans and credit cards. In 2009/2010 the company achieved 31% of total sales in international markets. The market cap is 31.7 billion pounds (US$51.83 billion) and Tesco is now the world's third largest retailer behind Wal-Mart (first) and Carrefour of France. In the UK it has been reported that one out of every eight pounds spent in retail stores...

Words: 342 - Pages: 2

Free Essay

Adfs

...organisation This report is going to describe the main physical and technological resources in Tesco plc. Tesco operations in the UK are the largest within the Group, with over 3000 stores and over 310,000 colleagues. Over 65% of Group sales and profits come from the UK business, where they are the market leader. The report describing physical and technological resources in Tesco plc will have different aspects that will be explained and how Tesco plc manages those aspects. Physical resources Description and examples of how these feature in Tesco plc (P3) How management of physical resources can help to improve the performance of the business (M1) Buildings and facilities Tesco plc operations in the UK are the largest within the Group, with over 3000 stores in the uk. Tesco plc has also expanded in different countries such as china with 124, Czech republic with 322, hungry with 213 stores, republic of Ireland with 137 stores, japan with 121 stores, etc. Building and facilities helps resources in a business by having expanding and refurbishment will help improve business appearance, for example Tesco plc said ?We are working ...read more. Middle for example there are insurances such as, customer insurance, employees insurance, vehicles insurance, etc. this suggest that these insurance will cover something?s that happens in Tesco plc?s stores Managing insurances is important to Tesco plc because some aspect need to be insured legally for example, if someone didn?t manage the insurances...

Words: 630 - Pages: 3

Premium Essay

Tesco

...the UK. The retail industry employed 2.9 million people, as at the end of September 20. Supermarkets dominate the UK food retail market, with 56.0% of sales. 3 Company overview Tesco¶s is a United Kingdom based international supermarket chain. It is the largest British retailer both by global sales and by domestic market share. Established in 1924. Tesco is the third-largest retailer in the world next to Wal-Mart, Carrefour and is operating around 2,440 stores and employing over 4,00,000 people www.Tesco.com is recognized as the world¶s largest online grocer, with a customer base of little less than 1 million and more than 250,000 orders a week. Tesco¶s market share of UK retailing is 12.5%. 4 Company overview Tesco has moved into areas such as clothes, consumer electronics, consumer financial services, internet services, consumer telecoms and gas stations. Tesco now controls over 30% of the grocery market in U.K. As of March 2008, Tesco have a store in every postcode of the UK. 1960 1970 1980 1960 2000 5 Competitors Competitors ASDA Group Limited BP Plc Carrefour S.A. ExxonMobil Corporation The Big Food Group Plc J Sainsbury plc Marks and Spencer Group plc Royal Dutch/Shell Group Safeway Inc. 6 Safeway plc Somerfield SPAR HandelsAktiengesellschaft The Boots Group PLC Wm...

Words: 1187 - Pages: 5

Premium Essay

Notes

...the company Tesco PLC that is UK’s leading grocery store. The aim of this report is to develop a three-year marketing strategy plan and a one-year tactical communication plan for Tesco. Tesco at some stage has faced difficulty hence by exploring the brand and critically analyzing its marketing strategy, I will then develop a strategy that would turn Tesco’s fortune around. 1.1. Methodology Market research for the brand has been conducted through secondary research by visiting academic websites such as Mintel, Database reports,LexisNexis Database, Business reports, Articles, Blogs and News online. 1.2. History Tesco PLC is a multinational grocery and general merchandise retailer headquartered in Cheshunt, Hertfordshire, England, United Kingdom. It is the third largest retailer in the world measured by profits and second-largest retailer in the world measured by revenues. It has stores in 12 countries across Asia, Europe and North America and is the grocery market leader in the UK (where it has a market share of around 30%), the Republic of Ireland, Malaysia, and Thailand. Jack Cohen founded Tesco in 1919 as a group of market stalls. The Tesco name first appeared in 1924, after Cohen purchased a shipment of tea from T. E. Stockwell and combined those initials with the first two letters of his surname, and the first Tesco store opened in 1929 in Burnt Oak, Middlesex. His business expanded rapidly, and by 1939 he had over 100 Tesco stores across the country. (TESCO PLC, 2015) 2...

Words: 21936 - Pages: 88

Premium Essay

Tesco's Annual Report

...oVeRVieW tesco around the world Creating value for customers across all our businesses UK Revenue* £40,766m Number of stores Us Revenue* 2,715 Employees £495m Number of stores 293,676 Selling space (sq ft, % of Group) 164 Employees 4,134 Selling space (sq ft, % of Group) 36.7m sq ft 35.4% 1.7m sq ft 1.6% tesco Bank Revenue* £919m Employee figures represent the average number of employees during the year ± 230 employees across asia and Europe work in locations other than those listed Employees * Revenues are sales excluding vaT and exclude the impact of iFRiC 13 (customer loyalty schemes) † Revenue for Europe includes France; revenue for asia includes india 1,274 GDP growth: Economist intelligence unit europe Revenue*† Revenue* (£m) Stores GDP growth Employees (% real change pa) £9,192m Number of stores 1,082 Employees± Republic of ireland Poland Hungary Czech Republic slovakia turkey 2,332 2,156 1,649 1,355 996 700 130 371 205 158 97 121 13,344 24,932 21,157 12,812 9,105 8,038 -0.8 3.8 1.2 2.3 4.0 8.1 89,559 Selling space (sq ft, % of Group) 30.2m sq ft 29.2% asia Revenue*† £10,278m Number of stores 1,419 Employees± india in india, we have an exclusive franchise agreement with Trent, the retail arm of the Tata Group. we are supporting the development of their Star Bazaar format. 104,071 Selling space (sq ft, % of Group) 35.0m sq ft 33.8% Revenue*...

Words: 88441 - Pages: 354

Premium Essay

Tesco

...COMPANY PROFILE Tesco PLC REFERENCE CODE: 34972414-9A41-4048-A7B6-1B0017054743 PUBLICATION DATE: 7 Feb 2013 www.marketline.com COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED. Tesco PLC TABLE OF CONTENTS TABLE OF CONTENTS Company Overview..............................................................................................3 Key Facts...............................................................................................................3 SWOT Analysis.....................................................................................................4 Tesco PLC © MarketLine Page 2 Tesco PLC Company Overview COMPANY OVERVIEW Tesco PLC (Tesco or ‘the company’) is a food and grocery retailer. The company primarily operates in Europe and Asia. It is headquartered in Hertfordshire, the UK, and employed 519,671 people, on an average, in FY2012. The company recorded revenues of £64,539 million (approximately $103,223.7 million) in the financial year ended February 2012 (FY2012), an increase of 6.8% over FY2011. The operating profit of Tesco was £3,985 million (approximately $6,373.6 million) in FY2012, an increase of 1.7% over FY2011. The net profit was £2,806 million (approximately $4,487.9 million) in FY2012, an increase of 5.7% over FY2011. KEY FACTS Head Office Tesco PLC Tesco House Delamare Road Cheshunt Hertfordshire EN8 9SL GBR 44 1992 632222 Phone Fax Web Address http://www...

Words: 4383 - Pages: 18

Premium Essay

Tesco

...Assessing the performance of tesco TESCO plc is a United Kingdom based group specialised in food retailing, it operates as a grocery and general merchandising chain in the United Kingdom and across the world. So far, it is the largest British retailer in term of sales and market share with, according to Thomson one banker, a total net income of £ 2,161.00 for the year 2009. It is also the third largest global retailer group in term of revenue after the American group Wal-Mart and the French group Carrefour. With a main activity of food global retailer, it has diversified his activity into clothing, home, financial services, car insurance, health, telecoms and internet services and software. However in this report we are focusing on its clothing unit which operates online. So to better know this Tesco clothes retailing, this report will bring an overview of the company and will analyse its current strategic position, the same as its fitness with the other business units. This report will also analyse the Tesco clothes retailing’s macro environment, the competitive environment, the strategic capability and also the future strategic options. Tesco clothes retailing’s brief overview: The Tesco clothes retailing company is among the biggest clothing retailer by volume in the United Kingdom as it was ranked at the third place in 2008 and had to juggle this place with Asda Direct online retailer behind Mark & Spencer and Primark (Hall, J.). Tesco clothes retailing is committed...

Words: 2668 - Pages: 11

Premium Essay

Marketline Case Study Tesco

...MarketLine Case Study Tesco plc Case Study How Tesco Became the UK's Largest Retailer Reference Code: ML00001-041 Publication Date: December 2011 WWW.MARKETLINE.COM MARKETLINE. THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED TESCO PLC CASE STUDY © MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED ML00001-041/Published 12/2011 Page | 1 OVERVIEW Catalyst Tesco is the largest retailer in the UK and dominates the UK food and grocery market, accounting for almost a third of all grocery sales. This case study examines the factors that have led to the growth of the company as the UK’s number one retailer. Summary In 1995, Tesco overtook Sainsbury’s to become the UK’s largest retailer. Since that time the company has grown from strength to strength, widening its lead year on year.  The unrivaled success of the Tesco Clubcard in building customer knowledge and generating loyalty has been fundamental to the rise of Tesco.  The company has created a powerful brand and a number of valuable sub-brands including store, product and service brands.  Tesco’s grocery product brands tend to center around a three-tier branding system, allowing the company to appeal to a mass market.  Tesco has been a forerunner in the price competitive environment of the UK food and grocery market, utilizing its economies of scale to lead price wars with other supermarkets.  The company has grown inorganically, buying out various independent grocers...

Words: 4232 - Pages: 17

Free Essay

Report on Tesco

...An Insight Report on TESCO Plc. By Aanca Georgiana Table of Contents I. II. III. Executive Summary .................................................................... Page 3 Trade Barriers ............................................................................. Page 4 Technological Advances .............................................................Page 4 a. Information Technology ......................................................... Page 4 b. Retailing Technology ............................................................. Page 5 c. Operation Systems Technology ............................................. Page 5 d. Recommendations ................................................................ Page 6 IV. Adapting to Local Markets ........................................................... Page 6 a. Retailing Services ..................................................................Page 6 b. Marketing Strategies .............................................................. Page 8 V. VI. VII. VIII. IX. X. XI. XII. XIII. XIV. XV. Mistakes of Tesco......................................................................... Page 8 Fixed Costs ..................................................................................Page 9 International Trade & Comparative Advantage ........................... Page 10 Political Factors .......................................................................... Page 11 Operation Pressures......................................

Words: 3649 - Pages: 15

Free Essay

Tesco Case Study

...Marilynn Black Tesco Case Ashford University BUS620: Managerial Marketing (NAC1244A) Dr. Susan Sasiadek 11/05/12 Tesco is one of the world’s leading retailers with over 2100 supermarkets, in Europe, US and South East Asia. The group has interests in grocery, non-food items, financial services and telecommunications. It is committed to reducing prices for customers and offering the best value. It seeks to help customers spend less. In 2007, sales were £42,633.4 (mill) and it experienced sales growth of 21.9%. Tesco has over 400,000 employees (Tesco plc, 2010). Tesco Company has attributed an increase in performance and productivity to the use of this model (Tesco plc, 2010). Tesco is an international retailer with a global presence in over 14 countries and a major share of the UK retail market and a consumer base exceeding 260 million people (Child, 2002). Considering the utter size and operations of the organization, it is essential that it deploys a strong strategic performance management structure in order to improve and reinvent itself continuously. The recent financial crisis put Tesco under the pressure when its customers by seeking reduce its expenses switched to cheaper alternative supermarkets as Lidl, Asda and Aldi. According to the has poor results in this market segment, and in order to maintain their market share, the company has tackled the problem by releasing 400 low -cost new ranges of food and products on their shelves. Tesco had to change...

Words: 996 - Pages: 4

Free Essay

Managing Financial Resources

...to conduct an analysis of the financial statements of J. Sainsbury plc and Tesco plc for the year ending 2013, comparing both companies by looking at the ratios calculated and looking at the importance of supplementing financial analysis with non-financial considerations. Tesco is Britain’s leading food retailer and the third largest in the world. Tesco opened in 1929. After joining the eighties trend for large out-of-town supermarkets, in the 1990’s the company started pioneering many new innovations. Tesco has over 530,000 colleagues over 12 countries serving up to 75 million transactions every week. J. Sainsbury is into grocery, retail and financial services. It has a 16.8% UK market share. It has 157,000 colleagues, 23 million customer transactions per week, and 1,106 stores. The information in appendix 1 and 2 was extracted from both companies’ annual reports, for Sainsbury’s year ended March 2013 and February2013 for Tesco. Analysis An operating profit of £9.25 was made on every £100 of capital employed from Sainsbury’s. Compared to Tesco, an operating profit of £7.02 was made on every £100. Looking at the two figures Sainsbury utilizes their capital more efficiently than Tesco, because looking at their revenue scale Tesco is has 2188 compared to Sainsbury which only has 887. Using the 10 year benchmark in the UK, the risk free return rate is at 2.87% in the UK ( (Bloomberg). Therefore comparing Tesco and Sainsbury against the risk free return they are both performing...

Words: 884 - Pages: 4