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Tesco shares fall despite strong results

James Batchelor

Tesco's promising finacial results have been met with lukewarm reception, resulting in a sharp drop in shares.

Shares fell 3.9p to 387.5p as its results were announced, with investors concerned with weaker then expected sales growth in the second quarter.

“At first glance, Tesco's results look promising, but scratch beneath the surface and cracks have started to appear,” said Manoj Ladwa of analyst group ETX Capital.

“Despite a net first half profit in excess of £1bn and a hike in their dividend, the much lauded US expansion has yet to prove profitable. As the company loses market share to the likes of Sainsbury's and falling food prices are likely to impact on future earnings, Tesco may have to look at alternate markets if it is to offer growth and value to shareholders.”

Tesco has dramatically increased its presence in the PC and consumer electronic space over the past couple of years, and in this sector the firm is excelling. Sales in Tesco’s non-food business climbed 4.9 per cent.

Company CEO Sir Terry Leahy claimed that the UK economy is past its low point, with a “slow and steady” recovery expected.

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Tags: Retail , tesco , financial reuslts

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