December 9, 2013
Tesco's latest quarterly sales update made for more uncomfortable reading for the UK retail giant last week.
Like-for-like sales in the 13 weeks to 23 November fell in each of Tesco's ten markets.
There were three countries in which the sales decline was less steep than the previous quarter but, nonetheless, the period was another challenging one for Tesco.
In the UK, where LFLs were down 1.6%, Tesco has become caught between the continued strength of discounters Aldi and Lidl and the ongoing success of more upmarket grocers Sainsbury's and Waitrose.
One cannot deny Tesco CEO Philip Clarke has set about trying to inject the company's domestic arm with a sense of urgency and the business has undertaken a series of initiatives - from refreshing product ranges and refurbishing stores to investing in online and mobile - but, as yet, the efforts have yet to bear fruit.
Clarke has indicated it will take time for Tesco's moves to pay off but already some in the City are questioning the retailer's strategy.
Outside the UK, while Tesco could point to macro factors in some markets (regulation in South Korea), its performance remains in the doldrums, particularly in Ireland, where sales were down a whopping 8% in the quarter.
Tesco has launched its Price Promise comparison scheme across the Irish Sea in a bid to win back custom from rivals but, as in the UK, there is little sign the likes of Lidl are losing steam, with the German giant opening more stores in Dublin this week.
This coming March, Clarke will have been Tesco CEO for three years. It has been a challenging period and, at least in the short term, there is unlikely to be any let up.
Another UK-listed giant facing questions from some in the City met analysts last week.
Unilever held its investor day in London on Thursday amid some concern about the company's slowing sales.
Growth in some key emerging markets has eased and has also been hard to come by in some Western markets, prompting Unilever to respond by cutting costs; it plans to shed 2,000 jobs worldwide and remove more SKUs from its product portfolio.
"The global economy has calibrated down about 1-1.5% and we probably should have done a better job seeing it coming," Unilever CEO Paul Polman told analysts. "We're using that opportunity to step up the performance and drive new energy into the organisation."
Unilever will also look to boost margins and push them up towards that of its peers by focusing, it said, on higher-margin products. CFO Jean-Marc Huet said Unilever would focus on "premiumisation", "margin accretive innovation" and "channel opportunities" in fast-growing areas such as drug stores.
However, there was some disappointment among analysts Unilever chose not to discuss its spreads division - long seen as a problem area - in depth.
In an interview with just-food this autumn, Polman questioned analysts' criticism of spreads but it remains a focus area for the City and a category where one struggles to see how Unilever can enjoy significant long-term growth.
Until next time...