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Tesco Plc (LON:TSCO) |
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WIKI ANALYSIS
Business Overview
Tesco is the UK's largest grocer by sales and also operates grocery stores in 12 international markets across Europe, Asia and the United States.[1] Additionally, Tesco offers retail banking and insurance services through its Tesco Personal Finance segment and telecom services under its Tesco Telecom business.[1] Tesco operates as a discount retailer and earned about £62.5 billion in revenue in 2010, an 6.8% increase from a year earlier.
Business Growth
For the year ended February 27th, 2010, net sales increased 6.8% to £62.5 billion. Net income rose 10.4% to £3.457 billion.[2]
Trends and Forces
Financial services risks affect Tesco's bottom line
On December 19, 2008, Tesco acquired Tesco Bank with three main products (credit cards, unsecured personal loans, and savings) as well as an insurance business. With this acquisition, Tesco took on the bank's risks, such as vulnerability in its insurance business due to natural or man-made disasters. Competition in the financial services industry also affects Tesco Bank's ability to operate effectively and profitably, which could negatively impact Tesco's net income. Also, Tesco Bank is currently building new banking and insurance systems and is outsourcing most of its operations to the Royal Bank of Scotland. As a result, there is increased operational risk from this outsourcing until Tesco's new systems are complete.[3]
By diversifying globally, Tesco is affected by exchange rates and international economies
Competitors
- Walmart
- Sainsbury (LON:SBRY) is the third largest supermarket chain in the UK with 15.9% market share.
References
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