City File: Tesco may be bottom of the class

TESCO'S performance will be under the microscope on Tuesday. This means not only its profits, expected to rise 7 per cent to pounds 585m, but also its market position relative to J Sainsbury and Argyll, which owns Safeway.

The worry is that Tesco will be bottom of the class with a like-for-like drop in sales while its rivals are still growing, albeit not as strongly as they used to be. Tesco hopes to close the gap with special promotions and offers, but these all cost money.

Then there are worries about the growth of discount stores in the sector, undercutting Tesco's increasingly upmarket offer. All in all it makes Tesco shares, at 233 1/2 p, look unattractive.