The Week Ahead: Tesco results give insight into supermarket price war


Investors will get an idea of just how badly the price war among supermarkets is hitting bottom lines on Wednesday when Tesco reports first-quarter trading figures.

The Big Four supermarkets have been slashing prices in a bid to stem the tide of customers defecting to discounters such as Aldi and Lidl. The knock-on effect is lower sales receipts, and Shore Capital reckon Tesco’s mid-week numbers will be “grim”. The broker is forecasting a 3.5 per cent fall in sales, with the analyst Clive Black saying he “struggles to recall such weak sales”.

Bruno Monteyne at Bernstein predicts an even more eye-watering 4.1 per cent slump.

It’s a quiet start to the week today, with just a trading update from the patent translation company RWS Holdings.

The warehouse owner LondonMetric reports finals tomorrow, as does the steel giant Severfield-Rowen and water supplier Pennon. The heating and plumbing giant Wolseley also updates on trading.

Wednesday sees finals from Advanced Computer Software, the direct shopping group Findel, packaging business RPC, SME office space provider Workspace and Synergy Health.

AO World will be hoping to prove the doubters wrong when it reports 2013 numbers on Thursday. The online fridge to washing machine retailer has underperformed since listing in February, falling below its 285p float price.

The other companies with full-year results that day are the catalytic convertor maker Johnson Matthey, electronic parts distributor Acal, foil and film manufacturer API Group and supply chain specialist Wincanton.

Management at the housebuilder Bellway will also update on performance, while easyJet publishes traffic figures for May.

Turning to Friday, the pub group and brewery Fuller, Smith & Turner hands in 12-months figures, as does the IT and communications group KCom.

In economic news, Mario Draghi’s speech on Thursday will be closely watched, with the ECB president expected to introduce measures to stave off eurozone deflation. If he doesn’t, markets could face a sharp correction.