Tesco Plc · LSE:TSCO
Tesco — Q3 2014/15 Earnings Presentation
43 slides from Tesco's earnings presentation, Jan 8, 2015
Slide 1: Tesco Update
8 January 2015 TESCO UPDATE Dave Lewis - CEO, Alan Stewart - CFO
Slide 2: Agenda
Agenda • Since we last met • Results: Q3 and Christmas Trading • Update on three key priorities • Next steps
Slide 3: Since we last met
Since we last met • 23rd October First half impact of commercial income overstatement Immediate priorities set out • 9th December New commercial approach Full year guidance provided: ‘no more than £1.4bn’ • 8th January Update on priorities Guidance reiterated
Slide 4: Investing in our customer offer
Investing in our customer offer Service Availability Price
Slide 5: Service
Service 6,700 More than 2 Feet on the colleagues million hours Floor
Slide 6: Customer metrics
Customer metrics Customers rating overall service & colleague helpfulness as excellent 70% 45% 32 33 34 35 36 37 38 39 40 41 42 43 44 Total North Central South London Convenience Source: Customer Viewpoint measure
Slide 7: Customer metrics
Customer metrics Evening 'I Don't Queue' performance 10.5 10.5% 4.5% 4.5 Q2 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Base Total North Central South London Convenience Source: Retail Dashboard report
Slide 8: Availability
Availability 98.4% 93% 250 Dot com 9pm sales 1,000 lines based
Slide 9: Customer metrics
Customer metrics Customers who were strongly satisfied with overall availability 77 77% 57% 57 32 33 34 35 36 37 38 39 40 41 42 43 44 Total North Central South London Convenience Source: Customer Viewpoint measure
Slide 10: Selective investment in price
Selective investment in price 1,000 lines Category Promotional review
Slide 11: Customer metrics
Customer metrics Customers very satisfied with the prices paid 60 60% 35% 35 32 33 34 35 36 37 38 39 40 41 42 43 44 Total North Central South London Convenience Source: Customer Viewpoint measure
Slide 12: And....
And…. Food 2.2 Workload to stores Hardlines 12.1 Clothing 8.2 75% Total 2.7 (days cover YoY) Time Stock Service
Slide 13: Results – 3Q and Christmas Trading
Results – 3Q and Christmas Trading Like-for-like sales growth* 1Q 2Q 3Q Christmas UK (3.7)% (5.4)% (4.2)% (0.3)% Asia (3.2)% (4.9)% (5.0)% (3.9)% Europe (1.0)% (2.5)% (1.2)% 1.0% Group (3.2)% (4.8)% (3.8)% (0.6)% * Inc. VAT, Exc. Fuel.
Slide 14: Results – 3Q and Christmas Trading
Results – 3Q and Christmas Trading Total sales growth* (constant rates) 1Q 2Q 3Q Christmas UK (1.7)% (3.3)% (2.6)% 1.2% Asia 1.5% (0.9)% (1.7)% (1.0)% Europe (0.6)% (1.6)% (0.3)% 1.6% Tesco Bank 3.6% 5.8% 2.7% 3.8% Group (0.9)% (2.5)% (2.0)% 0.9% * Inc. VAT, Exc. Fuel.
Slide 15: UK like-for-like sales performance
UK like-for-like sales performance* 2012/13 2013/14 1Q 2Q 3Q Christmas (0.3)% (0.3)% (1.3)% (3.7)% (4.2)% (5.4)% * Inc. VAT, Exc. Fuel.
Slide 16: UK Category like-for-like sales performance
UK Category like-for-like sales performance* Food Non-Food 1Q 2Q 3Q Christmas 1Q 2Q 3Q Christmas 4.8% 1Q 2Q 3Q Christmas (1.4)% (1.7)% (3.7)% (4.5)% (4.8)% (4.4)% (6.2)% * Inc. VAT, Exc. Fuel.
Slide 17: UK Format like-for-like sales performance
UK Format like-for-like sales performance* Extra Superstore 1Q 2Q 3Q Christmas 1Q 2Q 3Q Christmas (2.2)% (1.9)% (4.6)% (5.9)% (6.3)% (6.1)% (7.5)% (6.9)% Metro Express 1Q 2Q 3Q Christmas 1Q 2Q 3Q Christmas 4.9% (1.2)% 2.1% 1.4% (3.8)% (4.9)% (5.1)% (0.6)% * Inc. VAT, Exc. Fuel. Excludes statutory ad
Slide 18: UK Channel like-for-like sales performance
UK Channel like-for-like sales performance* Stores Grocery Home Shopping 1Q 2Q 3Q Christmas 1Q 2Q 3Q Christmas 12.9% 11.1% 11.2% 7.8% (2.0)% (4.9)% (5.9)% (7.2)% Online Clothing Online General Merchandise 1Q 2Q 3Q Christmas 1Q 2Q 3Q Christmas 52.4% 25.3% 22.2% 40.4% 28.9% 8.3% 7.1% 10.1% * Inc. VAT,
Slide 19: UK Category like-for-like sales performance versus the market
UK Category like-for-like sales performance versus the market* Value Volume Total Store Total Store Total Food Total Food Packaged Packaged Fresh Fresh Health & Beauty Health & Beauty Convenience & Emerging Markets Convenience & Emerging Markets General Merchandise General Merchandise (1)% 0% 1% 2%
Slide 20: Team Tesco
Team Tesco
Slide 21: Executive Committee changes
Executive Committee changes Trevor Masters - CEO, International Matt Davies - CEO, UK & Ireland
Slide 22: Three priorities
Three priorities 1 Regaining competitiveness in core UK business 2 Protecting and strengthening the balance sheet 3 Rebuilding trust and transparency
Slide 23: Regaining competitiveness in core UK business
1 Regaining competiveness in core UK business 2015 Customer-focused retail excellence - Service - Availability - Stock - Price integrity Category range resets - Customer-centric - Balance quantum and rate margin - Create new category value Customer reasons to re-believe
Slide 24: Sweet-free checkouts
1st Jan: Sweet-free checkouts Over 3 bn calories All formats removed from soft drinks All checkouts 67% 63m parents say more portions from 1st January sweet-free of fruit & veg in checkouts ready meals 2015 help them and soups Industry- Healthier Healthier leading options lives
Slide 25: The Nation's Favourite Brands
8th Jan: The Nation’s Favourite Brands Brands Unit Price No promotion
Slide 26: Simple, agile, lower cost
Simple, agile, lower cost £250m+ per annum Restructuring Cost reduction Closure of 43 Store management unprofitable stores structures
Slide 27: Protect and strengthen the balance sheet
2 Protect and strengthen the balance sheet • Property • Pensions • Capital expenditure • Portfolio • Dividend
Slide 28: Property
Property 1.8m sq. ft. 49 sites Pipeline review End-to-end property review
Slide 29: Pensions
Pensions May 2015 June No later than 2015 Valuation Feb Consultation 2016 Implement Important Consultation Timing benefit
Slide 30: Capital expenditure
Capital expenditure Productivity £1bn Property and Capability & infrastructure returns Maintenance & Refresh 2015/16 Discipline Allocation
Slide 31: Reshaping the portfolio – some facts
Reshaping the portfolio – some facts £3.4bn £5bn £1bn £2.3bn facilities within pre- 16/17 + 3 yrs financed 17/18 Strong funding Good maturity Continue to review and liquidity profile full-value options
Slide 32: Reshaping the portfolio
Reshaping the portfolio c.£0.5bn revenue c.£100m profit Insight into 770m customers Over 20 retail partners TalkTalk dunnhumby Long-term strategic benefit
Slide 33: Dividend
Dividend Protecting and No final strengthening Investment in dividend proposition balance sheet 2014/15 Discipline Priority
Slide 34: Trust and transparency
3 Trust and transparency + ve - ve Brand Ways of working Investment case
Slide 35: Brand
Brand Level Range Price Consistency Communication Service Availability Pricing you can New category Innovations trust approach
Slide 36: Brand
Brand Farm to Fork Food collections Diabetes UK 500,000 children 21.5 million meals £18 million
Slide 37: Accounting and the investment case
Accounting and the investment case Commercial Modern stock Property income take review
Slide 38: The way ahead
The way ahead • Multi-year programme • Difficult changes, impacting all stakeholders • High level of volatility • Doing the right thing for customers and the business • Actions to strengthen the balance sheet will continue • First call on margin improvement will be further investment in customer off
Slide 39: Summary
Summary • Investment in core service, availability and selectively price • Key customer measures improving • Period to Christmas trading an encouraging first step in LFL • Significant cost reduction programme • First step to progress balance sheet: disposals and pensions • New initiatives to improve
Slide 40: Priorities
Priorities 1 Regain competitiveness in UK 2 Protect and strengthen the balance sheet 3 Rebuild trust and transparency
Slide 41: Putting our customer first
PUTTING OUR CUSTOMER FIRST
Slide 42: Q&A
Q&A
Slide 43: Disclaimer
Disclaimer This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and trading margins, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan", "intend", "anticipa