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Tesco’s target of matching Aldi prices is paying off



tescos target of matching aldi prices is paying off

Tesco’s popularity among shoppers is on the rise after strategic initiatives such as its Aldi Price Match promise ramped up its appeal, analysts have revealed.

Research from Swiss bank UBS indicates customers’ perception of Tesco’s prices, the near-record uptake of its Clubcard and its ‘net promoter score’ – the number of customers who would recommend the store – have all shot up since February.

The report suggests recent initiatives by outgoing chief Dave Lewis have given Tesco fresh traction ahead of the arrival of new boss Ken Murphy, who presents his maiden results this week after just days in the job. 

Research from bank UBS indicates customers' perception of Tesco's prices is up from February

Research from bank UBS indicates customers' perception of Tesco's prices is up from February

Research from bank UBS indicates customers’ perception of Tesco’s prices is up from February

UBS said industry experts believed ‘Tesco is tactically doing the right thing by targeting Aldi, with the view that the price leader in the market is the latter and not Asda any more’.

It added that Tesco, Sainsbury’s, Asda and Morrisons are in a better strategic position since coronavirus broke out.

The report said: ‘We have seen significant changes in customer behaviour.

‘The increase in online [grocery] penetration in the UK market since the Covid-19 crisis – from around 7 per cent to 13 per cent – and the ongoing trip consolidation are in favour of the Big Four.’

UBS has a Buy rating on the shares with a £3.15 price target. The stock closed at £2.10 on Friday.

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Is Europe next stop for profits? EU firms could boost your capital 




is europe next stop for profits eu firms could boost your capital

As the rows continue over the terms of our exit from the European Union, now could be the moment to reconsider investing on the Continent.

Many people who have made a pile in US tech are looking for new opportunities. And these could be on offer in European markets, even amid Brexit apprehension and mounting Covid-19 anxiety.

Such a diversification requires strong nerves, however. Following a record GDP rebound in the third quarter, economists are cutting their fourth-quarter forecasts, in response to Covid restrictions.

The Stoxx 600 share index contains some booming businesses such as Logitech, the Swiss-US maker of computer handsets and keyboards, whose third-quarter sales were up 75 per cent

The Stoxx 600 share index contains some booming businesses such as Logitech, the Swiss-US maker of computer handsets and keyboards, whose third-quarter sales were up 75 per cent

The Stoxx 600 share index contains some booming businesses such as Logitech, the Swiss-US maker of computer handsets and keyboards, whose third-quarter sales were up 75 per cent

The French capital may be known as the city of light but is currently dark, its cafes shuttered.

The Stoxx 600 share index, which includes companies of all sizes in 17 EU and non-EU member states, is in an unhappy condition, weighed down by banks and utility groups whose profits are falling.

Yet it also contains some booming businesses such as Logitech, the Swiss-US maker of computer handsets and keyboards, whose third-quarter sales were up 75 per cent. 

Since January, its shares have leapt from 46 Swiss francs to 81 Swiss francs.

The achievements of such European tech groups rarely hit the headlines, unlike Wirecard, the fraudulent German payments group which collapsed in June.

34765166 8873285 image a 3 1603481960804

34765166 8873285 image a 3 1603481960804

Without this infamous business, the Dax, the German index, has done fairly well, as Nick Peters, multi-asset manager at Fidelity, points out. 

China’s strong revival is a boon to the Dax, which is full of exporters like Volkswagen.

Over the next few weeks, the focus will be on the fortunes of household names like luxury goods conglomerate LVMH, along with lesser-known giants such as Covestro, the German polymer manufacturer.

These two may have delivered third-quarter profit increases. But can they, and other companies that have bounced back, sustain this performance?

Peters says that analysts believe 2021 should be a better year, on the basis that EU governments will continue to rely on local lockdowns to limit the damage to their economies, rather than national ones.

Aiding this resurgence will be the €750billion (£576billion) EU recovery fund, which is targeted at struggling countries.

Of course, closer unity may not be the consequence of this subsidy for the South, financed by the thrifty North. 

Jamie Ross, portfolio manager of Henderson Euro Trust, asks: ‘Will this transfer of wealth bring the EU closer together? Or will it spark angst over the continuation of the European project?’

Good question. Yet whatever the fate of the EU, Ross argues that Europe has many businesses set to prosper from lifestyle changes taking hold around the world, spurred by lockdown.

Amazon and the rest of its Silicon Valley ilk are not the only winners from the shift to online.

Ross lists Embracer, the Swedish gaming company whose shares have doubled in 12 months, along with Scout 24, Germany’s equivalent to Rightmove.

He also likes Zur Rose, the Swiss ecommerce pharmacy and Delivery Hero, the German food delivery group which operates in Europe and Africa, America, Asia and the Middle East.

34765164 8873285 image a 5 1603481965459

34765164 8873285 image a 5 1603481965459

Delivery Hero is loss-making but analyst Sherri Malek of RBC – which rates the shares as a buy – believes that they could rise significantly, as more households prefer to let someone else do the cooking.

Rather than holding traditional bank shares, Ross prefers outfits like Nexi, an Italian payments business and Prosus, the Dutch tech investor which has a 31 per cent stake in Tencent, owner of the Chinese We Chat app with its 1.7billion users.

Buying shares in Prosus, which stand at €80, up from €68 at the start of the year, combines a bet on Europe with a cheap-ish way into booming Tencent.

Anyone now wondering how to get more exposure to Europe could look at Fundsmith, that small investor favourite (of which I am a holder). Its second-largest holding is Danish pharmaceutical company Novo Nordisk.

Since March, its shares have risen from 352 Danish krone to 446 Danish krone, driven by demand during the pandemic.

Baillie Gifford European Growth, another popular trust, has Prosus, plus Berlin-based Zalando, the fashion site whose shares have moved from €41 to €84 over the past 12 months.

Fidelity Europe owns Nestle, which has this week reported stronger-than-expected growth, propelled by a lockdown love for pasta and pizza.

If you already have many of these holdings, Interactive Investor’s adventurous recommendation is TM Crux European Special Situations. Worth a look whether you will be celebrating on December 31, or not.

Popular Shares – BP

BP backers will hope for light at the end of the tunnel when the oil major reports its third-quarter results on Tuesday.

After a cataclysmic year thanks to Covid, many will have their fingers crossed that all the bad news has been announced. 

The prized dividend has been chopped in half, it plans to cut 10,000 of its 70,000 workers, and it has predicted oil demand may never get back to 2019 levels.

Shares are at around 26-year lows, having fallen in value by more than 55 per cent this year.

Indications that finances are stabilising and that its restructuring is on track could be enough to soothe the most anxious investors. 

Analysts are bracing for BP to post a loss of £273million, compared with profit of £1.8billion in the same period of last year, according to estimates from Reuters.

This would be a fraction of its last quarterly loss, which came in at £13.5billion. The preservation of the dividend – even at its current levels – will be a major concern, but it is likely to stay.

Investors will also be keen to see how new-ish boss Bernard Looney’s green strategy is taking shape, especially if there are more deals waiting in the wings after it signed an £850million contract to buy stakes in two US wind farms last month.

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ALEX BRUMMER: Private equity predators land in the UK




alex brummer private equity predators land in the uk

The arrival of Lone Star on the scene as the saviour of retirement home builder McCarthy & Stone provokes fears of a financial dystopia where the UK’s future is decided not here but by anonymous tycoons based in Texas.

In the first decade of the 21st century there was an overseas buying spree of British firms, mostly by Continental and US trade buyers.

Dutch chemical group Akzo Nobel bought the rump of ICI, custodian of Dulux paints, and has invested heavily in the brand and built a spanking new R&D campus at Felling in the north-east. Under Tata ownership the design-led Jaguar Land Rover car marques became challengers again in the luxury motoring bracket.

On the prowl: Private equity owners seek to use cheap debt to make as quick a turn as possible on their investment

On the prowl: Private equity owners seek to use cheap debt to make as quick a turn as possible on their investment

On the prowl: Private equity owners seek to use cheap debt to make as quick a turn as possible on their investment

Private equity owners have a different agenda. They seek to use cheap debt to make as quick a turn as possible on their investment. Shares quoted on the London Stock Exchange have become an easy target. The UK market has underperformed most advanced nations because of the shadow of Brexit.

Property is proving a soft target because of the depressing effect of Covid on rents.

The Lone Star bid for McCarthy & Stone, tainted by its past connection with rapacious Peverel, is a case in point. The £630million offer looks generous because of a 39 per cent premium to the pre-bid share price.

But it is way below where the shares traded before the pandemic. The latest private equity intervention came after Countrywide’s rambunctious boss Peter Long sought to surrender control of the estate agency – owner of Hamptons and John D Wood – to Alchemy.

Canada’s Brookfield is building a stake in British Land, one of the leading quoted real estate groups. Ever-ambitious KKR has established a bridgehead at Great Portland Estates, with a 5 per cent stake.

Under the badge of Garda World, the private equity firm BC Partners is trying its luck with a low-ball £3billion bid for security firm G4S, which has been firmly repulsed. 

Off the radar, Advent, the private equity buyer of Cobham, is cutting jobs at the Dorset aerospace pioneer quietly.

Private equity has no concept of national interest. Operating behind closed doors, the returns for overseas partners and investors take priority.

It is a dispiriting prospect for Britain as we plan for a post-Brexit future.

Staley’s stand

Investment banking is not so bad after all. The valiant effort by Jes Staley to make Barclays Europe’s most effective player in the wholesale markets is paying off.

Trading revenue climbed sharply and fixed income in particular was up 23 per cent, which places it on a par with the big American players JP Morgan, Morgan Stanley and Goldman Sachs.

Running a UK bank during Covid-19 is not easy. Vast bad debt write-offs in the first half drove the share price down by 37 per cent. The third quarter was better as the UK consumer emerged from hibernation.

Quarterly profit climbed to £611million from a loss of £292million last year. The litigation and regulatory overhang of the financial crisis is fading now, and Covid is the main concern.

Barclays is pessimistic about the loss of UK output and obviously is preparing investors for the worst. 

Nevertheless, bad loan provisions were lower than expected. Staley is adamant that if the Bank of England were to opt for negative interest rates it would be another blow to a sector feeling the strain.

The long debate about Barclays’ exposure to investment banking, sparked by Ed Bramson of Sherborne, is an ever-present incentive to Staley to keep pushing the envelope. But there will always be voices arguing that it’s too risky and too capital-intensive.

Staley has shown great personal staying power in the face of the whistleblower scandal and questions about past associations with the late, convicted sex offender Jeffrey Epstein. But his work will have been in vain if his successors decide that running an investment bank is not worth the effort.

Deep waters

Water is in the headlights at present with an outbreak of hostilities between the regulator Ofwat and the Competition and Markets Authority over the next five-year price settlement.

South West Water owner Pennon, meanwhile, is taking advantage of the new deal by offering customers a choice between a price cut of £20 or shares in the owner.

An amazing 52,295 people, which is the equivalent of a town the size of Paignton on the English Riviera, chose Pennon stock.

Hosepipe capitalism lives on.

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DIRECTOR DEALS: Marshalls finance director Jack Clarke




director deals marshalls finance director jack clarke
34765544 8873551 image m 3 1603482622632

34765544 8873551 image m 3 1603482622632

The finance director of paving and urban design firm Marshalls has sold £421,365 of stock. Jack Clarke offloaded 58,432 shares for 721.2p apiece.

Clarke, 54, said it was for ‘personal tax purposes’ and that he still owned more than the minimum requirement of 200 per cent of his salary. 

He has been with the company since 2014.

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