Tesco Plc · LSE:TSCO
Tesco — Deutsche Bank Global Consumer Conference 2014
29 slides from Tesco's conference presentation, Jun 17, 2014
Slide 1: Philip Clarke, Tesco PLC
17 June 2014 Philip Clarke, Tesco PLC 0
Slide 2: Group sales £71bn, trading profit £3.3bn
Group sales £71bn ($120bn) Group trading profit £3.3bn ($5.6bn) Over 500,000 colleagues 7,305 stores worldwide Tesco.com in 11 markets Over 85m shopping trips a week Third party marketplace 1
Slide 3: UK, Asia, Europe and Bank overview
UK Asia Europe Bank Sales £48bn £10.9bn £10.8bn £1bn Profit £2.2bn £692m £238m £194m Established 1st or 2nd 1st or 2nd £6bn saving in 1919 in 3 markets in 5 markets deposits Market leader 2,417 stores 1,510 stores 7m customer accounts 3,379 stores JV with CRE in Pan-regional A complete retail China
Slide 4: Tesco's strengths
• Global sourcing scale • World-class supply chain and logistics • Strong people, processes and systems • Great store locations, multiple formats • Profitable online grocery business • Strong own-brands and services • Unrivalled customer insight • Most loyal customer base • Banking and telecoms serv
Slide 5: Year-on-year sales growth by channel
Sales growth – Kantar 4 week data Strong growth in online – Rapid online migration now a mainstream consumer trend – Customers increasingly blurring boundaries between online and offline – Smartphone and tablet penetration gaining pace Year-on-year sales growth Strong growth in convenience – Rise in
Slide 6: Growth in online and convenience, pressure on large stores
Blinkbox +245% Online clothing +70% Strong growth in online – Rapid online migration now a mainstream consumer trend – Customers increasingly blurring boundaries between online and Online general offline +25% merchandise – Smartphone and tablet penetration gaining pace Strong growth in convenience +
Slide 7: Significant future potential
Significant future potential Improve returns, hold position Refocus on more profitable approach to growth 6
Slide 8: We have strengthened our foundations in the UK
We have strengthened our foundations in the UK a Service & Staff Stores & Formats Price & Value i (i Ma Range & Quality Brand & Marketing Clicks & Bricks
Slide 9: UK customer offer improvements
More customers are rating overall customer • Price Promise service and staff helpfulness as excellent* 150 145 • Materially improved full range of > 8,000 140 136 products in our core Tesco range 131 • Re-launched ranges – Everyday Value, finest*, Healthy Living 100 • New General Merchandise in stor
Slide 10: New, differentiated brands and services
New, differentiated brands and services Pioneered home shopping Strong own-brands Build advocacy through content Personalisation Invested in stores Launched Clubcard Accessible everywhere 9
Slide 11: Average Annual Spend with Tesco
2.98x Average Annual Spend with Tesco 4% of customer count 2.04x +17% customer growth* Similar growth across all affluences* In-store only In-store + online grocery In-store + online grocery + general merchandise online In-store Online grocery General merchandise online All data shown is based on a
Slide 12: In February, we laid out our accelerated plans
In February, we laid out our accelerated plans: 11
Slide 13: Accelerating our plans: sharper prices
Accelerating our plans: Sharper prices i , a Peppers down Salad tomatoes down Spring onions down 4 pint milk down Freecenge sagt down Sutter down and staying down and staying down and staying down and staying down and seayinardoen and staying down Carrots down Beef mince down Chicken breast portions
Slide 14: Customers have already saved money on fuel
customers have already average saving saved money on fuel * Based on Welsh trial. 13
Slide 15: Lowering the cost of online shopping
Accelerating our plans: Lowering the cost of online shopping Delivery charges down and staying down . Now we can deliver your a WV \ groceries from fy All your groceries delive from £3 per month* Plus our NEW Delivery Saver Guarantee If your plan costs more than you'd have spent on delivery charges,
Slide 16: Ingredients
‘Ingredients’ Food to Go New Food F&F Experiences Produce Compelling Fresh food destinations Services New look Beauty GM 15
Slide 17: Large store reinvention: roll-out programme
Large store reinvention Roll-out programme To date^ Refresh roll-out Format Total number Refresh 14/15 Ongoing per of stores* stores year Extra 247 82 c.110 c.60 Superstore 482 178 c.50 c.100 Metro 195 46 c.40 c.50 Express 1,672 309 c.450 c.375 Capex c.£400m c.£500m c.£500m • Typical refresh work la
Slide 18: Large store reinvention: 50,000+ sq ft stores
Large store reinvention c.50,000+ sq ft (247 stores) • Food First • Food to Go in specific locations • Destination Clothing • General Merchandise • Appropriate and relevant New Food Experiences 17
Slide 19: Large store reinvention: re-launched in May
Large store reinvention Re-launched in May • Focus on fresh food and services - Introduced Euphorium Bakery and The Bakery Project - Harris+Hoole coffee shop - Decks carvery restaurant - New Food to Go section – including halal sandwiches - Extended ranges in World Foods - New service ranges includi
Slide 20: Large store reinvention: re-launched in June
Large store reinvention Re-launched in June • Food focused offer: - Food at the front of the store - Refreshed produce - Food to Go - Island counters - Decks restaurant • Next Generation F&F • Beauty World • Destination GM • Community room 19
Slide 21: Large store reinvention: re-launched in June
Large store reinvention Re-launched in June • Focus on fresh food and services - Produce, counters, bakery - Introduced Euphorium bakery and The Bakery Project - Pharmacy, Tesco Phone Shop, latest clothing and improved GM offer 20
Slide 22: Newport Extra
Large store reinvention Newport Extra • Newport and Stockton completed with five similar schemes planned for 2014 – Glasgow St Rollox, Leigh, Culverhouse Cross, Oldham Huddersfield Road and Prescot Café • Reduced GM and Electrical space, better choice • Complementary retail tenants Newport profit pr
Slide 23: Loyal customer metrics
• Retaining loyal customers • Attracting more new customers • Shopping across our channels • And across our brands 1. Percentage of last year’s loyal customers* who are still loyal to Tesco 3. Percentage of loyal customers* who in the last 13 weeks have shopped two or more channels** 2. New loyal cu
Slide 24: Factors affecting sales
• Significant reduction in short- term couponing • Deflationary effect of price cuts • Refresh disruption and fewer new stores • General merchandise Coupon Impact transformation • Focus on loyalty will deliver LFL sales growth and attractive and sustainable returns 23
Slide 25: Volume and order growth after price cuts
Grocery dotcom Orders* growth % Lower delivery prices launch • Volumes up c.28% in lines where we cut prices • Record orders in Grocery Home Shopping Week • Building response to Clubcard Fuel 47 49 51 1 3 5 7 9 11 13 15 Save, led by the pilot in Wales Sales growth in Wales – Kantar* • Strongest impr
Slide 26: Our new current account
Our new current account Clubcard Collect & Spend Clubcard Clubcard My Clubcard Account »))] 5? 3001 2345 b789 | s STEPHANIE. DUNBAR VISA | 20 DEBIT Find out more Introducing our new current account when you spend Collect extra Clubcard points in and out of Tesco with your debit card. Earn 3%AER vari
Slide 27: Customer focus will drive success
• Customers’ expectations are changing • We are firmly focused on the most compelling offer • Customer focus will drive success • Increasing loyalty is key • Pace is accelerating 26
Slide 28: Forward-looking statements
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", "anticipate", "well
Slide 29: Q&A
Q&A TESCO a a ae a a
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