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Tesco
Jeff Liddiard
Posted: 18 June 2017 17:43:01(UTC)
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Any views on Tesco shares for the fun portfolio in view of the sp drop on Friday re the Amazon Whole Foods announcement?
King Lodos
Posted: 18 June 2017 19:00:50(UTC)
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I'm not a stockpicker, but it doesn't look like a quality company to me .. PEG ratio's cheap as of right now, but looked terrible in 2016 .. Return on Capital only 4 and 5.8% the past two years .. Lots of trends pointing the wrong direction – and if it wasn't for chilled items, I'd already be using Amazon for everything.

https://www.tescoplc.com/investors/reports-results-and-presentations/financial-performance/five-year-record/

With a PEG around 0.4, it could obviously explode on the upside, but my philosophy is it's only top Quality companies you want to buy when they get cheap .. Otherwise I'd buy and sell on technicals (pyramid into strong upside and sell quickly when the trend reverses).
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Jon Snow
Posted: 18 June 2017 19:57:43(UTC)
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I'd look at why the sp fell on the news (are Amazon a real threat in the food retail space, logistics for perishables vs non etc) and if you think there may be a reversal and why. Also a better punt may be Ocado, twinning their food experience and capabilities with, say, Amazons customer stickiness (they use the phrase fulfilment and it's quite a powerful concept, what you wanted when you want it.)

The competition between the supermarkets is so intense in the UK the only way to make above average returns is pile 'em high or value added customer service, the big four are "stuck in the middle" and there is nowhere for them to go as an analysis of their accounts will show. That's why Tesco are looking at Booker, anything to change the space they operate in and gain any competitive advantage at all. Same with Sainsbury's and NIsa.

I wouldn't invest in Tesco. Then again I'm a collective fan usually.

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Jeff Liddiard on 18/06/2017(UTC), Mr Helpful on 19/06/2017(UTC)
Jon Snow
Posted: 18 June 2017 20:10:23(UTC)
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Double post, blooming wifi.
john_r
Posted: 18 June 2017 20:30:53(UTC)
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Put another way Tesco's main problem for several years is due to those other two kids on the block Aldi & Lidl. What has happened over the last few years? Well Lidl and Aldi have continued to open many more shops, Tesco have closed some. It looks to me like Booker or bust.
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Jon Snow on 18/06/2017(UTC)
Jon Snow
Posted: 18 June 2017 20:39:27(UTC)
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john_r;48035 wrote:
Put another way Tesco's main problem for several years is due to those other two kids on the block Aldi & Lidl. What has happened over the last few years? Well Lidl and Aldi have continued to open many more shops, Tesco have closed some. It looks to me like Booker or bust.


Also, recalling the last time we shopped at Tesco, their "own branded" stuff was poor quality.
dyfed
Posted: 18 June 2017 21:05:42(UTC)
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From personal experience Lidl and Aldi are significantly cheaper, but they carry a much narrower range of stuff. So if you want something specific - even some basics - you have to go to Tesco for a one-stop-shop. However, near us Aldi and Lidl.are opening bigger stores with a wider range.
So pressure's on for Tesco I recon, though their home delivery's a winner.
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Jeff Liddiard on 19/06/2017(UTC)
Jon Snow
Posted: 18 June 2017 21:19:30(UTC)
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dyfed;48037 wrote:
From personal experience Lidl and Aldi are significantly cheaper, but they carry a much narrower range of stuff. So if you want something specific - even some basics - you have to go to Tesco for a one-stop-shop. However, near us Aldi and Lidl.are opening bigger stores with a wider range.
So pressure's on for Tesco I recon, though their home delivery's a winner.


Yes, they had a small format store near us, after 10 years of trading you can't even get into the car park. So they bought a co-op supermarket that they're due to move into this year, so nibbling away at the big four even more.

Still not sure I want to buy a wetsuit and a frozen lobster at the same time though.
King Lodos
Posted: 18 June 2017 23:06:48(UTC)
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When it comes to chicken I've been finding Tesco getting consistently weaker.

Finest chicken breasts have been awful – they're often gigantic and rock hard .. Either they've overdone the bull steroids, or they're adding a lot of bulking agent (a practice of cheap chicken factories) .. They can be nearly inedible .. And the cheaper stuff's often got burns and blood bruises.

The local Aldi's chicken is less than half the price and quality's faultless so far .. May be a local thing, but I avoid Tesco like the plague these days.
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Joe Soap on 19/06/2017(UTC)
Jon Snow
Posted: 18 June 2017 23:25:16(UTC)
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King Lodos;48041 wrote:
When it comes to chicken I've been finding Tesco getting consistently weaker.

Finest chicken breasts have been awful – they're often gigantic and rock hard .. Either they've overdone the bull steroids, or they're adding a lot of bulking agent (a practice of cheap chicken factories) .. They can be nearly inedible .. And the cheaper stuff's often got burns and blood bruises.

The local Aldi's chicken is less than half the price and quality's faultless so far .. May be a local thing, but I avoid Tesco like the plague these days.


I think it's probably nationwide and due to cost cutting. I may of course be wrong and mistake cost cutting for extra value in every basket.
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King Lodos on 19/06/2017(UTC)
Jim Thompson
Posted: 19 June 2017 10:46:12(UTC)
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A point of view from a lorry driver:

Tesco used to be awful. I used to bank on staying at their distribution centre delivering fresh goods for between 2 to 4 hours. I never touched the load so had to rely on their warehouse staff. Things changed after they discovered the accounting issues, and lost market share as their customers left to shop somewhere where they could find staff to help them. I find it a nice place to be as a shopper and delivery driver.

Aldi is reasonable, but Lidl are awful. You unload yourself, which sounds fine in principle but then you have to wait for your paperwork for quite some time before they let you go. This can involve standing to attention at the goods in desk for 45 minutes with only other drivers and a coffee machine for company. There is always a price to pay for cheap, and in the case of the discounters, they certainly do not improve the employment figures for the area. Tesco is not an investable business but by god I hope they keep going so I don't have to shop at Lidl, and continue to enjoy the experience instead of feeling like I am at a car boot sale.
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Mickey
Posted: 19 June 2017 14:37:58(UTC)
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I wouldn't write Tesco off just yet. In our area it is Tesco or Co-Op, both are smaller stores but nobody else is interested in the quieter parts of the country or so it seems. Tesco also offer home delivery out here and you see their vans around quite a bit so business looks to be there.

The store itself is usually fairly busy, clean and well stocked with a good range of choices for budgets. It's not my favourite place to shop but I'm hoping they keep the store open.
Jeff Liddiard
Posted: 19 June 2017 15:49:32(UTC)
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Jon Snow;48033 wrote:
I'd look at why the sp fell on the news (are Amazon a real threat in the food retail space, logistics for perishables vs non etc) and if you think there may be a reversal and why. Also a better punt may be Ocado, twinning their food experience and capabilities with, say, Amazons customer stickiness (they use the phrase fulfilment and it's quite a powerful concept, what you wanted when you want it.)

The competition between the supermarkets is so intense in the UK the only way to make above average returns is pile 'em high or value added customer service, the big four are "stuck in the middle" and there is nowhere for them to go as an analysis of their accounts will show. That's why Tesco are looking at Booker, anything to change the space they operate in and gain any competitive advantage at all. Same with Sainsbury's and NIsa.

I wouldn't invest in Tesco. Then again I'm a collective fan usually.



Jon you were right about Ocado, I wish I'd bought early today!
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Jon Snow on 19/06/2017(UTC)
Mark Stringer
Posted: 20 June 2017 06:53:28(UTC)
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'and if it wasn't for chilled items, I'd already be using Amazon for everything'
I recall a similar attitude when the individual shops on the high street started to vanish and supermarkets took over then people wonder why they have sod all choice. The pile it high and sell it cheap.
I personally rarely use Amazon now for anything and prefer to give my business to Argos (Sainsburys) and where possible local shops.
The thought of Amazon being 'it' in the future is stark.
There is a great article in the Economist (6 issues back) about Amazon which shows you where it has got it's fingers and into which pies.
It always makes me smile that people use Amazon normally due to the short arms, long pockets syndrome, but are loathe to apply that concept to their own situation and would be offended if they had to price their services at the lowest common denominator.
What happens when Amazon have driven the price of food (look at milk and lamb for some farmers with supermarkets already) to the lowest price point; crappy Iceland quality is what.
Sometimes the 'price of everything and the value of nothing' should be ringing loudly as a warning.
They pay sod all tax in real terms and I, like most here want to make profits on shares except I don't want to have to hold my nose when I do it.
The tech firms who dominate in terms of influence on the stock markets need to have their wings clipped in my opinion. How cheap do we want our food both in price and quality to get.
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J Thomas on 20/06/2017(UTC), Jim S on 20/06/2017(UTC), Mickey on 20/06/2017(UTC)
King Lodos
Posted: 20 June 2017 08:06:11(UTC)
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Re: tax .. I think for our economy, becoming a tax haven makes a lot of sense.

Over 700 companies have relocated to Ireland for their tax breaks .. Now Ireland don't get much tax from them, but they do get a lot of employment, a lot of money flowing into the economy, and in 2015 they saw their economy grow by I think 26.8% .. Most of us struggle to get 2%.

My conversion to Amazon started with a wheat intolerance .. Tesco do wheat-free pasta, but it was expensive, and at their whim whether it was stocked and which brand they were stocking.

I can buy the same products from Amazon in bulk; always in stock; and dramatically cheaper .. Basically wholesale .. Now if platforms like Amazon can connect manufacturer straight to buyer, it makes much more sense to cut out middlemen.

On the same note I buy vegetables as much as possible from the local farm shop .. I'd much rather support farms directly at their own prices .. Plus the quality is often so incomparable, it would be impossible to go back (especially on things like garlic).

Another thing that disappoints me with supermarkets is spices .. I cook a lot of Indian food, and restaurants often buy in bulk from distributers like SpicesofIndia .. Great shop .. I can buy half a kilo of Coriander for a few £, and the quality is night and day compared to the dry, scentless bottles of Schwartz I can spend 20x as much on in Tesco .. So I suppose really I see supermarkets as unnecessary middlemen with overheads that don't benefit the consumer, and don't seem to benefit producers much either.
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jvl
Posted: 20 June 2017 10:11:15(UTC)
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I like low taxes too but it seems hardly anyone's with us on this.

I find Tesco's Chorizo to be pretty good. Other than that, I don't trust the meat.

Every time I do a big supermarket shop it seems to take me over an hour, even though we live pretty close. I'm always surprised that I don't do more online food shopping, having had pretty good experiences with Sainsbury's and Waitrose.
chubby bunny
Posted: 20 June 2017 12:00:04(UTC)
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A lot of supermarket meat is pretty naff, especially the pork and chicken. Even good independent butchers are a dying breed. They've been forced to cut corners and drop prices due to the competition from nearby supermarkets. We've been let down by our local, family run butchers on many occasions: one sold me Eastern European, out of date shin of beef; another fatty, defrosted beef mince sold as fresh and 'free range' chickens with hock burn and bruises. A very good quality butcher is a 15 minute train journey away but we are happy to support it.
Mickey
Posted: 20 June 2017 12:21:54(UTC)
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chubby bunny;48085 wrote:
A lot of supermarket meat is pretty naff...

I know that Tescos buy meat from one of our local farmers, their buyer will ring him on say a Friday night and ask for 2 cows to be slaughtered for the morning, he doesn't get much notice as they want the meat fresh not frozen. I wonder what they do with it if not putting it on the shelves?

I watched a programme recently and supermarkets such as Waitrose where responsible for keeping some of our traditional beef breeds and herds alive and viable rather than the trend to stock solely European influenced breeds that are much larger and less fatty. On the other hand the same series showed the decimation to dairy and cereal farms in the UK.

Back to the thread though, if we had John Lewis and Waitrose nearby I expect we would never use the likes of Amazon for food etc.
Jon Snow
Posted: 20 June 2017 12:37:03(UTC)
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They'd probably be bullocks. not cows (hopefully).
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