New Tesco chief executive Ken Murphy to oversee retail giant’s results for first time

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Tesco PLC (LON:TSCO) new chief executive Ken Murphy will oversee the retail giant’s half-year results for the first time on Wednesday just days after taking over at one of the most prominent names in the UK corporate world, although he at least has had a fairly steady tiller handed to him by his predecessor Dave Lewis.

The key focus for the market will be Tesco’s outlook statement and any hints of a strategic shift from Murphy, plus confirmation that the sales of its Asia businesses and a resulting GBP5bn special dividend for shareholders remain on track.

Guidance for the full year is likely to remain for flat UK retail profits, reflecting the uncertainty of coronavirus (COVID-19) effects, analysts at Berenberg said.

“While it is likely too soon for Tesco to unveil the strategy of the new CEO, we believe the group will provide insight into the evolving equity story, focusing on leveraging its unrivalled UK retail distribution network, accelerated capital returns and technology,” said Berenberg.

Sales, as for all supermarkets this year, are likely to be strong – and online especially as shown by Tesco’s recently adding 16,000 online jobs – and the cost headwinds from the coronavirus pandemic that were flagged by Lewis are expected to be abating, many analysts think.

For the second quarter, analysts at UBS forecast 6.3% growth in UK retail like-for-like sales, excluding fuel and the Booker wholesale arm.

For the first half as a whole, UBS has pencilled in group revenue of GBP28.6bn and underlying profit (EBIT) of GBP898mln, held back by a GBP245mln loss from Tesco bank.

But the share price of Tesco and its listed rivals remains an issue, with all three down more than 11% over the past year, amid fears about a step-up in grocery market competition as Marks & Spencer teams up with Ocado, Aldi starts to offer click-and-collect and delivery services and Amazon prepares to offer delivery services to its Prime customers.

Significant Events expected on Wednesday, October 7:

Interims: Tesco PLC (LON:TSCO), Vertu Motors PLC (LON:VTU)

Trading announcements: Sirius Real Estate Limited (LON:SRE)

Economic data: UK house prices, US Fed minutes

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