Tesco’s new boss takes over today with shares languishing – and online rival Ocado nipping at its heels.
Ken Murphy replaces Dave Lewis, who bowed out yesterday after six years in the top job.
But although Lewis led Tesco through a much-needed turnaround, Murphy is inheriting a company with a share price that is actually 5 per cent lower than when his predecessor started.
Tesco was briefly overtaken in value by its online rival Ocado, with Tesco worth £21.1bn and Ocado £21.7bn
And in another sign of the challenges ahead, Britain’s biggest supermarket was briefly overtaken in value by its online rival – Tesco was worth £21.1billion and Ocado £21.7billion.
However, after Ocado shares fell 5.2 per cent, or 151p, to 2744p, its value dropped to £20.5billion, while Tesco was worth £20.8billion after its shares fell 1.2 per cent, or 2.5p, to 212.5p.
Dramatic changes ushered in by the pandemic saw a national lockdown send demand for grocery deliveries through the roof.
Stock Watch – Avacta
Shares in Avacta rose after it launched a rapid test for Covid-19.
The so-called BAMS test – standing for bead-assisted mass spectrometry – is designed to increase the speed of testing at hospitals and laboratories.
A single technician could use the new diagnostic to analyse up to 1,000 patient samples each day, Avacta said.
BAMS has first been made available for research. Avacta’s shares surged 10.7 per cent, or 15p, to 155p.
In the past six months, that has prompted Ocado’s shares to surge more than 110 per cent higher and added £12billion to its market capitalisation.
Tesco has been a winner from the changes too, increasing its internet customer numbers from 600,000 to about 1.5m, and it still commands a fearsome 26.8 per cent share of the UK groceries market, compared to Ocado’s estimated 1.7 per cent.
But despite this, the supermarket’s shares have fallen this year, with analysts warning about challenges it faces.
Tesco is still battling stiff competition from German discounters Aldi and Lidl while also facing pressure online from Ocado and Amazon, which continues to extend its reach into the groceries market.
The FTSE 100 struggled to stay above water, with the blue chip index see-sawing throughout the day before finishing down 0.53 per cent, or 31.4 points, at 5866.1.
Engineer Rolls-Royce was once again among the top fallers, slumping 7.4 per cent, or 10.4p, to 130p, while fashion retailer Burberry dipped 2.4 per cent, or 37.5p, to 1554p.
Caterer Compass fell 3.2 per cent, or 39p, to 1169p after warning it expects to report a 19pc drop in revenues for the year to September 30.
The firm also warned it cannot predict how quickly sales will recover from the coronavirus crisis, as boss Dominic Blakemore said long periods of social distancing could hit customer numbers.
Compass said the overall cost of adjusting to the pandemic, which includes layoffs, furloughing staff and slashing working hours, has now reached £130million.
But it was a better day for the FTSE 250, which rose 0.82 per cent, or 141.64 points, to 17315.3.
Bookmaker 888 said the return of sporting events and a surge in online betting have helped put it on track to beat previous profit targets.
Shares in the company rose 20.9 per cent, or 43.5p, to 252p, after it told shareholders it expects to post earnings for 2020 ‘significantly ahead’ of previous expectations. First half profits rose 56 per cent to £54.6million.
The turmoil wrought on high streets by the pandemic continued to crop up, with shares in Topps Tiles falling 8.8 per cent, or 4.6p, to 47.6p after the retailer warned that its revenues were set to fall.
The firm said it only expected a ‘modest’ amount of profit for the 52 weeks to September 26 after its like-for-like revenues fell by 12.5 per cent during the period.
And Aquis Exchange-listed wine maker Chapel Down saw shares fall 3.2 per cent or 2.5p to 74.5p after the firm reported a 2 per cent drop in revenues for the six months to June 30.
That was after coronavirus-related shop closures hit sales. But Chapel Down said direct to consumer sales had surged 473 per cent higher as customers instead turned to it directly to buy wine.