Time to Spread Bet on Tesco?
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Trading Features / Strategies from Simon Denham of Capital Spreads.
Tesco seems to have suddenly decided that enough is enough and is vigorously defending itself across the globe against perceived malicious journalistic falsehoods. For many years the British propensity to denigrate any successful business, sportsman or entertainer has been meat and drink to the tabloids and (to a lesser extent) the broadsheets but has been, in general, broadly ignored by the big corporations. Unfortunately it seems that Tesco has suddenly suffered a major humour failure over the Grauniad’s ‘apology’ last week after a particularly gruesome piece of ‘investigative journalism’ resulted in a total piece of garbage concerning corporation tax avoidance being trumpeted on the front page. Tesco’s point...that an apology sandwiched between the equivalent of the shipping forecast and an advert for a patent truss on page eighteen (or some such) does not exactly equate to the original lurid expose...is not unreasonable but...
The company, whilst it is quite within its rights to demand that the newspaper "assume the position", must be aware that there is a fine point between justifiable anger and perceived heavy handedness. Nobody likes a bully and Tesco are in danger of losing any sympathy they gained over the event and Journalists (even if they work on rival papers) do not like pressure to be brought to bear on any of their ‘union’.
Does this matter? And if it does "so what?"...You might say. Well, in the greater scheme of things of course it does not matter a great deal but on the other hand if the company finds itself at loggerheads with the ‘forth estate’ it may find that virtually every future project is routinely opposed ‘in print’ which might make it easy for councils to reject ‘in fact’. The company finds it difficult enough at the moment to get the required permission for even the smallest of convenience stores, if they insist on grinding any opponent into the dust (no matter how well deserved) they may well find that the difficult turns into the impossible.
Taking on the newspapers is a mugs game as even if you win you somehow seem to lose and Sir Terry (usually one of the smoothest operators around) should know this. Added to this is the appallingly bad PR story from Tesco Lotus in Thailand which is spiraling out of control and the company is risking quite a lot of goodwill in its efforts to silence a relatively minor irritation.
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With prices for staple foodstuffs rising sharply across the globe Tesco is unlikely to be everyone’s favourite just at the moment as retailers are often the ones to be blamed (quite unfairly of course) for the economic woes of others. All that the consumer can see is the price of their shopping basket going up just as ones purse is being squeezed on a myriad of other fronts.
No doubt the next trading statement will be on the strong side, as it usually is. However, in the current environment, it may be only a short trip from ‘good revenue figures’ to ‘blatant profiteering from the misfortune of others’ especially if you have used up all your press favours.
To believe that Tesco is now too big to be worried by such problems would be very foolish. Even supermarkets can go out of fashion…just ask Sainsbury.
For details on how to spread bet on:
Tesco and where to find free Tesco charts etc >> Tesco Spread Betting
Sainsbury and where to find free Sainsbury charts etc >> Sainsburys Spread Betting.
The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
'Time to Spread Bet on Tesco?' edited by SD, updated 13-May-08
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