Tesco boost fails to woo FTSE investors
Investors left Tesco shares off their shopping lists today as signs of slowing growth in the UK cast a pall over record profits of £2.2bn (€3.2bn).
Tesco was the second-heaviest faller on the FTSE 100 Index – off 5.25p at 321.5p – as the UK’s biggest supermarket felt the heat from resurgent competitors including Sainsbury’s and worries over a drawn-out probe into the grocery market persisted.
Even the promise of a £1.5bn (€2.2bn) buy-back programme failed to keep investors on-side today, although gains by financial stocks meant the Footsie was in good health overall – up 6.7 points at 6105.4 by mid-morning.
Tesco shares have failed to reflect the dominance of the chain over the past year, with the stock just 4% stronger in a booming stock market.
Corporate interest was also focused on BP after the oil giant posted a 4% fall in first-quarter profits to $5.27bn (£2.95bn/€7.6bn).
Shares gave back some of their recent strength, down 4.5p at 707p as profits reflected storm damage to rigs and the shutdown of the company’s biggest refinery. Royal Dutch Shell was unaffected by BP’s first quarter disappointment, with its own shares up a penny at 2043p.
Banks were in the money after their performance during the previous session was marred by profit-taking, with Alliance & Leicester rising 12p to 1140p and Barclays up 4p at 680p.
Elsewhere, leisure group Whitbread rose 2% – up 21p to 1178p – following its announcement that it planned to sell a sizeable chunk of its Brewers Fayre and Beefeater pub restaurants.
It will also review the “nature and size” of its investments in the Pizza Hut and TGI Friday’s chains as it continued to take action against stagnant sales.
Computer games retailer Game went the other way as annual profits fell 71% and it forecast a very competitive year in the UK before Sony launches its PlayStation 3 console in November.
Although it raised its annual dividend by 15%, investors trimmed their holdings in Game and its shares fell 3% or 2.5p to 79.5p.
