American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Business

Price war sidelines Tesco, Sainsbury’s from FTSE gains; analysts back Tesco

by admin April 10, 2025
April 10, 2025
Price war sidelines Tesco, Sainsbury’s from FTSE gains; analysts back Tesco

European markets posted sharp gains on Thursday after US President Donald Trump unexpectedly postponed a new round of tariffs on dozens of countries, including the European Union.

The decision sent relief rippling through financial markets, with the FTSE 100 surging by more than 4% to mark its biggest daily gain in months.

However, the buoyant mood on London’s blue-chip index was tempered by steep declines in supermarket shares.

Tesco and Sainsbury’s emerged as the day’s biggest laggards, weighed down by mounting concerns over a deepening price war in the sector.

Tesco warns of intense competition and falling profits

Tesco shares tumbled by 7%, or 24.4p, to 310.8p, their lowest level since July, after the retailer cautioned that profits would likely fall this year as it girds for battle in an increasingly cutthroat market.

The company forecast operating profits between £2.7 billion and £3 billion for the current financial year, well below City expectations of around £3.2 billion.

Britain’s largest grocer said it was preparing for an “intense” competitive environment and planned to maintain flexibility to defend its market share.

Chief executive Ken Murphy highlighted Tesco’s intention to continue investing in value for shoppers, even as inflationary pressures and rising operating costs bite.

“In the last few months, we have seen a further increase in the competitive intensity of the UK market,” the company noted in its outlook.

“We are providing guidance that gives us flexibility and firepower to respond to current market conditions.”

Tesco’s warning also dragged down shares in rival Sainsbury’s, which fell by 5%, or 12p, to 223.8p.

Asda’s aggressive discounting adds to pressures

The price war fears have been fuelled by a renewed push from Asda, led by chairman Allan Leighton, who earlier this year unveiled the supermarket’s largest round of price cuts in 25 years under its “Rollback” campaign.

This aggressive pricing strategy, aimed at fending off the rapid advance of discount chains Aldi and Lidl, is raising the stakes for established players.

“Supermarkets may be about to embark on a trade war of their own,” said Richard Hunter, head of markets at Interactive Investor. “

“Asda’s aggressive assault on prices, if it fully happens, will likely shave profits across the sector.”

Hunter noted that Tesco shares had already fallen by 10% this year before Thursday’s trading, amid growing expectations and an uncertain economic backdrop. He cautioned that headwinds were set to persist.

Despite the challenges, Tesco reported a 10.6% rise in adjusted operating profits for the previous financial year to £3.128 billion, with group sales climbing 3.5% to £63.64 billion.

The retailer also increased its market share in the UK to 28.3%, its highest level since 2016.

Looking ahead, Tesco said it was targeting cost savings of around £500 million to offset rising expenses, including a £235 million increase in National Insurance contributions.

Analysts say Tesco still well placed despite risks

While investors reacted nervously to Tesco’s cautious outlook, some analysts suggested the company remains well positioned to weather the storm.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown said, “Fears of a price war that could squeeze profitability have weighed on sentiment across the sector recently, but it hasn’t materialised yet.”

“Even if a price war materialises, Tesco reckons it’s in the most competitive position it’s been in for many years, helped by the Aldi price match and Clubcard prices keeping customers loyal. And despite recent headlines, Asda doesn’t appear to have the financial firepower to disrupt this dynamic.”

Echoing this view, Hunter added: “The upcoming battle is for Tesco to lose rather than Asda to win. The fact remains that the group’s market share has risen yet again to 28.3%, which is equivalent to that of its nearest rivals, Sainsbury and Asda, combined.”

The post Price war sidelines Tesco, Sainsbury’s from FTSE gains; analysts back Tesco appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
Chocolate giant Barry Callebaut’s sales drop as cocoa prices soar
next post
Rolls-Royce share price is recovering: is it a safe investment today?

Related Posts

Lucid Group stock forecast ahead of earnings: buy,...

May 6, 2025

Fed holds interest rates but keeps door open...

August 2, 2024

Alibaba stock price to double from here, veteran...

February 10, 2025

Morgan Stanley downgrades Udemy to Underweight: is more...

September 28, 2024

TikTok and five other Chinese firms could face...

January 16, 2025

BuzzFeed stock analysis: falling website traffic is a...

October 27, 2024

Here’s why United Airlines stock is beating American,...

November 26, 2024

How the Inflation Reduction Act sparked a manufacturing...

August 21, 2024

DoJ to push for Google to sell Chrome...

November 19, 2024

Why groceries are so expensive — and how...

May 27, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • Analysis: oil market braces for Mideast volatility, but prices unlikely to top $80/barrel

      June 16, 2025
    • Interview: Strategic location gives Brazil Potash cost advantage in domestic fertiliser market, says CEO Matt Simpson

      June 1, 2025
    • Canada’s Q1 GDP expands by 2.2%, driven by exports spike ahead of potential US tariffs

      June 1, 2025
    • President Trump to host farewell for Elon Musk as DOGE leader steps away

      June 1, 2025
    • UK’s digital banks face divergent fortunes: Starling stumbles, Monzo and Revolut soars

      June 1, 2025

    Categories

    • Business (3,125)
    • Investing (2,500)
    • Latest News (1,995)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved