“The logic for the deal lies in providing a growth engine for Tesco in the restaurant and hotels foods market, but investors are asking whether Tesco should walk before it starts to run,” said Hargeaves Lansdown senior analyst Laith Khalaf.
And like all retailers, Tesco has to contend with rising inflation creeping into the system, “which presents a challenge for supermarkets as the sector is so competitive that raising prices risks losing customers to cheaper rivals,” said Khalaf.
Quilter Cheviot’s head of research Chris Beckett added that the simplification of Tesco was “paying off”.
Improvements in product availability and customer service have both contributed to a good set of full-year results released this morning.
“Sales, profits and cashflow are all slightly ahead of market expectations and analysts are looking for a further 15% increase in operating profit this year and 23% in 2018/19.”
