..as it is that time of year when they provide their Christmas and year end updates. Well I'm sure you have all heard and read about the on going Tesco turnaround (?) plan and I'm sure there will be millions of pixels put forth about it today so I'll keep it brief on that one. The main shock was the passing of the final dividend + disposals as they seek to repair their balance sheet that way rather than having a rights issue. On balance I guess that's preferable to avoid diluting any recovery with millions of extra shares, but not one I'm tempted back into.
After my inflation versus deflation post yesterday I had a crazy idea. Perhaps with all their surplus land bank which they don't want to build stores on perhaps they should go into Housebuilding and build Tesco towns on them instead! At least they would earn better margins and have some price inflation. Or perhaps someone should raise a fund and go round buying up the surplus sites off of the food retailers before getting planning and then building them out a bit like Inland Homes do with brownfield sites?
Any way I digress also today we had that other retail institution Marks & Spencer reporting today. They looked like they missed expectations on food and general merchandise in particular with -5.8% LFL. Naturally they blamed the weather but they also had some distribution problems apparently. I can't get excited about this one either as the dividend has been flat to down since 2009 and they have struggled to grow earnings since 2010.
So plenty of worries in retail land and with Boohoo.com disappointing yesterday it seems the weather or whatever is still causing problems for general retailers in the latest period. On that note my attempt at value added today is to suggest you mind your eye on N.Brown (BWNG) if you hold that one. At their last Q3 IMS they reported slightly better numbers, but these left them still down on the year to date. Forecasts are for turnover to be up at the full year which leaves them a lot to do in Q4 which as we know has been tricky for most retailers that have reported so far. The shares have rallied strongly since November and I reckon they could be vulnerable to a poor update and further downgrades, but of course I could be wrong. If I was a spread betting man I'd be tempted to open a short, but as I'm not I won't.