At the time of last years results, the share price was 375p - it has since fallen back over 20% and the city vultures are closing in on CEO Phil Clarke.
So, what’s the reason for this decline and what‘s a small investor supposed to do?
Well for a start, they were unable to make a profit from many of their overseas expansions. In the US, after significant losses in previous years, they decided last April to cut their losses which wiped £1.2bn from last years profit for the group.
Secondly, they seem to have run into difficulties with their operation in China and have subsequently entered into a joint venture with China Resources. The venture into Japan has likewise been abandoned. Last month they launched a joint venture with Trent Hypermarket, a unit of Tata Group, to establish 12 Star Bazarr and Star Daily supermarkets in India.
This realigned strategy for their overseas operations incorporating greater support from local experts under local banners, and with less capital input, may prove to be more profitable in the longer term and probably has a better chance of success than the go-it-alone model.
Whilst they were busy getting into difficulties overseas, they took their eye off the ball in respect of their most profitable segment - the UK operation, and have lost market share to the likes of Sainsbury and more recently, the discounters like Aldi and Lidl. Inevitably margins, revenues and profits have declined and the board have felt unable to lift the dividend for the past two years.
The past two years has been spent trying to get the UK operation back on track. The company have just issued their full year results (link via Investegate). I was particularly looking for positive reassurance that the UK operation is making progress as it accounts for over 60% of Tesco group revenues, and in particular, food sales which account for around 90% of the UK total.