Breakingviews - Tesco's bad vibes are worse for non-food retailers - Reuters

A Tesco Extra supermarket is seen in London, Britain, February 10, 2022. REUTERS/Paul Childs

LONDON, April 13 (Reuters Breakingviews) - Tesco (TSCO.L) has given gloomy economic pundits a fresh downer. When UK supermarket chain Wm Morrison Supermarkets warned last week of inflation eating into its EBITDA read more , attention focused on whether its stronger 20 billion pound rival would follow suit. On Wednesday Tesco duly flagged that its 2022/23 operating profit from retailing would be in a lower range than the current financial year’s 2.65 billion pounds.

Chief Executive Ken Murphy was keen to stress that Britain’s assumed emergence from the pandemic should help offset annual consumer price inflation now at 7% read more . Tesco is actually boosting its UK online and overall market share as online specialists like Ocado (OCDO.L) falter read more . Its shares still fell 7%.

The group’s struggles point to worse pain for peddlers of less essential goods. The supermarket’s shares have fallen only 11% over the last three months. A Refinitiv index of UK cyclical stocks like clothes retailers Next (NXT.L) and Burberry (BRBY.L) is off 17%. If traditional defensive plays like Tesco are looking shaky, it bodes ill for everyone else. (By George Hay)

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Editing by Ed Cropley and Oliver Taslic

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