ANALYSTS expect upbeat results as Tesco joins a row of UK retailers hoping to cash in on the Christmas period in a trading update next week.
The supermarket is likely to benefit from the festive season to start the decade on a strong note.
"We expect a relatively upbeat trading update from Tesco on 9 January, confirming clear market outperformance in the UK over Christmas," said James Grzinic and Frederick Wild, analysts at Jefferies.
Shareholders will also be scouting for news on the company's proposed sale of its Asian business. Tesco said in December that it is reviewing its operations in Thailand and Malaysia after getting interest from potential buyers.
"With recent media coverage suggesting that the Asian process could materialise rather quickly, and investors more willing to engage on UK domestics, the stars look well aligned for a strong start to 2020 for the shares," Mr Grzinic and Mr Wild said.
Analysts at the Share Centre pointed out that this could give the business more than £6 billion to help fight off the competition from discount retailers.
"The acquisition of wholesale group Booker also provided a boost and if the sale of the Asian businesses, announced in December, goes ahead the company will have further financial firepower with which to fight off the challenge of discount groups Aldi and Lidl," they said.
Investors will also be looking for signs of growth in the company's delivery service, after its Christmas advertising put home delivery at the front and centre of its campaign.
A 90-second film highlighting the supermarket's role in "delivering Christmas to the nation for the past 100 years," played in December. It featured a driver making deliveries to Winston Churchill, and Jim Bowen during an episode of game show Bullseye.
The Jefferies analysts said that like-for-like sales are likely to fall by 0.5% over Christmas as it restructures in Central Europe.
The supermarket has been heavily restructured under chief executive Dave Lewis, who is set to leave the business in the summer.
"We assume a modestly negative UK retail like-for-like in the third quarter, but an improvement back to positive over the Christmas weeks," Mr Grzinic and Mr Wild said.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here