Tesco’s performance

Tesco is UK’s largest grocer and we’ve been spared no effort to serve customers. We aim to provide all our customers with excellent value and choices. You may not know that Tesco is also the world’s third largest grocery retailer with operations in 12 international markets, such as Europe, Asia, USA and so on, the employment is over 440,000 people and serving millions of consumers every week. In 2008, it achieved an impressive underlying pre-tax profit by 10% to £3.1billion. Though it is less compared with 11.8% growth in previous year, it can’t stop Tesco being the NO. 1 in UK.

The Bloomberg reported as a not positive way, it chose the title “Tesco U.K. Sales Rally; Profit Growth at 15-Year Low” rather than “Tesco annual profits top £3.1bn ”. And it focused on the difficulties they came across, such as demand deficient, price conflict with other supermarkets…The bias maybe Tesco is UK’s company and it tried to enter US market and get market share.

The Financial Times title is “Tesco annual profits top £3bn”, much more positive than Bloomberg’s. But it mentioned a lot of Tesco’s debt, which is £1.6bn more than it had predicted last September. It reported ‘The increase in net debt to £9.6bn — which had been anticipated by analysts — partly resulted from higher capital expenditure, including Chinese shopping centre investments’, which showed a little worried about its strategy. And it also mentioned about the losses from its Fresh & Easy grocery chain in the US were £142m, £34m higher than expected. Because FT is a professional financial media, when reporting the good news, it still needs to show something instable behind.

The Sun is completely positive from title to content--high growth, impressive profit, better performance than competitors. Maybe the readers of The Sun are mainly normal people, there is no need to report it so clearly like FT, otherwise it may make the readers confused. And the figures should not be hard to understand.

Conclusion
Although FT reported Tesco has lost £142m in US market, I think it’s not a big deal. As the loss mainly because the adverse of the exchange rate. And US is a new market to TESCO, it entered in 2007. To start is always hard, and now America is suffering from recession, Tesco haven’t got such a big market share, so the losing is acceptable. What’s more, entering a new market is not merely for the aim of profit, but also a business strategy. For business, time is money, if you enter other’s market, and get the market share first, it’s a big threat for your competitor. There is no doubt that world’s biggest retail—Malmart is a strong competitor for Tesco, so it is necessary for Tesco to enter US market, and it needs some time to adapt to US market.
Besides, Tesco has a great market portfolio, with operations in 12 international markets. South Korea is Tesco’s biggest overseas market – with turnover of about £4bn – following the £950m purchase of 36 hypermarket stores owned by E-Land Group in and around Seoul last year. And Asian achieved 14% growth in 2008, so even if US market suffered a big loss, the whole group still gained 10%. So the portfolio is a good way to spare the risk and maintain the profit. We can believe that the performance of Tesco will be better in the future.