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The Expert View: Tesco, Schroders and Next
by Chris Marshall on Jan 06, 2014 at 05:01
‘Buy’ into a Tesco turn-around
Shareholders can expect more bad news from Tesco (TSCO.L) when it provides an update on Christmas trading this Thursday – but after a rough year things could be looking up for the supermarket giant.
Retail analysts at Jefferies are among a slim majority of City scribblers who say ‘buy’ the shares after four consecutive years of declines.
Tesco, fighting to turn around its fortunes after a profit warning in January 2012, has been losing shoppers. It has invested £1 billion to turn around its UK business.
Though it will have had a ‘challenged’ Christmas, with group sales falling 1.5%, ‘we believe relative trading performance is improving in the UK and international LFL challenges are now past their worst,’ say the Jefferies team.
The market is still assuming the worst: ‘At current valuation levels investors price in the tough UK conditions but assume limited chances of a turn-around domestically or internationally,’ the analysts note.
Tesco shares rose 0.1% to 330p on Friday.
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As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
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