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So I was shopping as usual at my local Tesco store and it must have been the fourth visit that the same thing happened. I could not find my Finest Orange Juice, with Juicy Bits. I visited at a variety of times and concluded this was no accident. Something was wrong with Tesco. It just wasn't right.
Having been a customer of Tesco for many years, I was obviously a tad disappointed in the general quality of the store experience. The rather pleasant staff in store assured me each time the product was not a discontinued item, yet, none could produce a single bottle of the good stuff.
I began to notice at about the same time a gradual switch to the cheap and nasty stuff, a thick and viscous looking product, the sort you wouldn't drink undiluted, and i'm not talking water.
Tesco appeared to be seriously under performing, at least to my personal expectations of a great Tesco store. I don't expect a fancy experience at Tesco, but once they hook you on a decent product I at least expect them to deliver, as in stock it for goodness sake.
Sadly I started to take notice of the general lack of taste in their fruit, oranges and grapes devoid of any discernible flavour, so much so I started shopping at Sainsbury's and M&S simultaneously to compare, after all at my age it could have been a problem of taste buds.
Thankfully not however as M&S fruit seemed sweet and juicy by comparison, for not a significant price difference I might add.
That was it, as ever when I spot a problem with customer service I like to delve further. A cursory glance at the headlines and I discovered a story that seemed to explain away my experience
Tesco was in massive difficulty, the Chair and most of the board had been fired, the stock price had tumbled and Dave Lewis was drafted in to lead the turnaround.
Good luck to him I say, he'll no doubt need it. I was hoping to take advantage of a possible turnaround if the business was under valued. My cursory valuation however revealed that far from representing a bargain, Tesco was still overvalued, and at least to my mind would have to fall quite a bit before I would touch the stock with a barge pole,
I later discovered that a Certain Bill Ackman had also looked at the stock, according to a Bloomberg interview on you tube. And he seemed to confirm my thesis.
Below is a brief summary of the price and value I had attributed at the time and the subsequent drop in the price. Of course I realise that a bunch of short sellers would likely have sniffed this out and have sunken their ravenous teeth in, but I am not aware, it wasn't a play for my portfolio, but I could see some meat on that bone.
For me, Tesco is a great company, that has lost focus.
You are often bombarded with all manner of non essential tat when you enter the store, eg: the recent push to sell sub par broadband, or the never ending pile of travel insurance and sub par banking product.
Come on Tesco, sell the under performing bank and get back to basics, you know, groceries, that's why we go in in the first place.
Get that part right and we will consider the TVs, Clothing line et al! You have a great bakery, you make nothing of it and need to send your staff to M&S to see how its supposed to be done. My dad was a baker and he'd turn in his grave if he knew I ate that stuff. It used to be good. It can be again, but you need to treat your supply chain better. I don't know if the scandals of supplier extortion are true or not but you seemed to have chased market share and its a failed strategy.
I have a limited perspective as regards this, it seems to lag behind almost all of its closest competitors. My inability to purchase my favourite Tesco Finest Orange Juice with Juicy Bits is infuriating. It seems about four out of every five visits that they are not stocked with this, one of my favourite products. When I cant buy it I don't buy the sugary imitations they do seem to stock, id rather wait and do my entire shopping at Sainsbury's who do stock a decent alternative.
The Board have clearly made a good move in hiring Mr Lewis, we believe this will be the turnaround play of the century if it can be pulled off. We are not convinced at this stage the new CEO can turn the business without makking some very specific changes to the management structure and many of the deadwood will need to be changed if this business is to become anything more than a shadow of its former self
After some consideration of the numbers, it is my view that the share is overpriced even in the context of the huge fall it had, it could go south again, until we see some evidence of a sustainable turnaround we are not touching the stock. Good Luck Mr Lewis. PS We have written to Mr Lewis and as yet have not had a reply.
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