SaxoTV

Garnry: Why Tesco is not past its sell-by date

490 views
December 09, 2014 accounting, accounting irregularities, carrefour, equities, equity, equity market, equity market 2014, equity markets, equity portfolio, equity strategy, equity trading, franchise, investor, investors, market share, market volatility, operating costs, operating loss, operating profit, profit, profit decline, profit falls, profit loss, profit margin, profit taking, profit warning, profit warnings, profitability, profits, profits earnings, retail, retail industry, retail sales, retailer, retailers, retailing, retailsales, returns, saxo bank, saxo tv, share price, shares, shares 2014, shares down, shares drop, shares prices, supermarket, supermarkets, tesco, tesco expansion, tesco overseas, tesco profit reduction, tesco profit warning, tesco stock, tesco stock falls, tesco stores, tesco supermarket, trading, tradingfloor.com, volatile, volatility
For the second time in as many months, Tesco has issued a profit warning. In October the retailer's problems were down to allegations of accounting irregularities as well as a loss of market share. This Tuesday the company's warned that its full year profits won't exceed GBP 1.4 billion - significantly under expectations.

Saxo's Peter Garnry notes that it's almost a 50% decline in operating profits compared to 2013/14. But he says Tesco's sales are not deteriorating to the same degree. Garnry believes the retailer could be like the French supermarket Carrefour which experienced similar problems, restructured and bounced back. But he thinks investors wondering whether or not to buy shares should wait until the annual report is out in February in case there are any more 'negative surprises'.

Garnry thinks that for all its mistakes, Tesco is still a good franchise. He says the company needs time to sort itself out and isn't a takeover target. "I think they are stuck in tryign to turn the ship around - on their own," he says.