Tesco takes on Amazon as Clarke poised to unveil strategy

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Tesco has begun its attempt to take on Amazon Market Place as the City is poised to hear the grocer’s UK strategy.

The retailer has begun selling plants and garden equipment from horticultural etailer Crocus, in the first of what is expected to be a string of third-party deals, The Telegraph reports.

The grocer is expect to report a £3.64bn pre-tax profit on Wednesday, representing 2.8% increase on the previous year.

Tesco chief executive Philip Clarke will unveil his strategy to improve in-store experience and service at the UK’s largest retailer.

The Financial Times claims Clarke has between a year and 18 months to prove himself to shareholders or his future will be in doubt.

Speculation is rife over how much Clarke will invest in UK stores with figures ranging from £300m-£400m a year for the next two years.

House broker JP Morgan Cazenove has forecast operating profits of £2.5bn and a fall in operating profit margins from 6.2% to 5.9%.

Group profits will be boosted by a strong performance from its Korean business, and some of its European shops, as well as a cut in losses from its struggling US grocery chain, Fresh & Easy. Analysts believe losses in America will have fallen from £180m to about £120m. The company is expected to confirm it will break even by this time next year.

Marks & Spencer is also due to report this week when it reveals its fourth quarter performance tomorrow. The retailer is expected to forecast a £50m improvemnt in profits this year.

Tesco is expected to suspend plans for opening all stores over 25,000 sqft in the next three years, focussing on smaller format Metro and Tesco Express convenience stores.

Clarke is likely to reveal almost 23,000 new jobs including 7,700 full-time positions. He is also expected to reveal a shake up of its categories including a relaunched clothing offer and a reduction in electrical lines in favour of increased food or beauty services.

He is also expected to extend the grocer’s Click and Collect service to its entire 2,715 store estate.

Nomura analyst Nick Coulter said: “Tesco will have ended the year with 3,000 stores within easy reach of the vast majority of the population, open outside office hours, on Sundays and mostly with car parks.

“It may have to iron out the economic wrinkles but extending click-and-collect across its 1,400 Express stores will take it where Amazon cannot follow.”