Tesco’s shares dropped 8% last week as the UK’s largest supermarket announced weaker than expected profit growth. They delivered their 11th quarter in a row of increased like-for-like sales and their pre-tax profit for the first half of the year was up 2.2%. Their acquisition of Booker earlier in the year has shown strong returns and gives Tesco a greater strategic advantage – owning the wholesaler could help lower purchasing costs for their stores. However, analysts expected greater increases in profits and there are worries about their performance in some international markets, especially Poland and Thailand.
The UK market is also of growing concern as German discounters Lidl and Aldi are taking more market share. In an attempt to quash this increased competition, they have launched a brand new discounter store, Jack’s. The plan is to introduce 10 to 15 stores across the UK, which will sell predominately own-brand goods. Tesco sells over 35,000 products, but Jack’s will sell around 2,600 – focusing on essential groceries.