Market Analysis of TESCO



Executive Summary

This report is about the market analysis of Tesco in the retail business industry. Tesco is a grocery and a general merchandise retail company. Tesco is one of the biggest retail businesses in United Kingdom. Tesco is also involved in gasoline retailing, small urban store retailing and financial services. Tesco first began its operations in United Kingdom, in 1919. It sold its first own brand product in 1924, which was tea. Today it is the leading retail company in the United Kingdom with a line of its own brand household products. Tesco now operates in around 14 countries across the globe. I conducted an analysis of Tesco's financial performance for the year ending 2011, and compared it to its previous years result. Further I discussed about Tesco's future prospects and industry sector prospects.

Table of Content

Executive Summaryii

Introduction1

Analysis of Financial Data and Ratios2

Financial Performance and Analysis2

Ratio Analysis2

Profitability Ratios3

Liquidity Ratios4

Debt Management Ratios5

Asset Management Ratios6

Shareholders' Investment Ratios7

Conclusion8

Bibliography9

Appendix 1 (Formulas)10

Appendix 2 - Calculations11

Market Analysis of TESCO

Introduction

Tesco plc is a grocery and a general merchandise retail business company. It was founded by Jack Cohen in 1919 in United Kingdom, where he first started selling items on a stall set up in the East end of London. In 1924 the company sold its first own brand product which was tea. In 1929 first Tesco store was opened in the North London. In 1932 Tesco was registered as a private limited company. Later in 1960's, Tesco acquired a chain of 212 stores in the North England followed by new 144 stores in 1964 and 1965. In 1960's Tesco was termed as the biggest super store in Europe. Today it is now one of the biggest global grocery and general merchandise retailer.

Tesco plc is also listed on the London Stock Exchange and has a total market capitalization of approximately 24.4 billion pounds. Tesco's average daily volume in the market for the last three months is 379,332.66, and highest price in the last three months stands at 20.02 per share. Major shareholders of Tesco plc are Berkshire Hathaway Inc. with a total share of 3.02%, Blackrock, Inc. with a holding of 5.48% and Legal & General Investment Ltd with a total share of 3.99%. Tesco now operates in about 14 markets across the globe with its 5,300 stores, and a total work force of 492,000 employees.

Tesco plc is currently being managed by Philip Clarke who is the group chief executive of Tesco. Tesco's main global competitors are Wal-Mart Stores, Inc, Carrefour S.A and Kroger Co. (Tesco PLC, 2012)

Analysis of Financial Data and Ratios

Financial Performance and Analysis

Tesco plc financial year 2011 ended with flying colors. Tesco was able to generate group revenue of 60,931 million pounds in financial year 2011, which was 7.1% higher than the previous financial year. This revenue of Tesco ended up making a group profit before tax of 3,535 million pounds, which was almost 11.3% higher than previous year's figure. (Tesco PLC, 2012)

A detailed analysis of Tesco's financial performance is performed ...