Tesco shares drop on weak results

(Source: Yahoo! Finance)

Shares in supermarket Tesco have dropped by over 3.5 per cent as weak results and a costly exit from the US announced earlier have not digested well.

Espirito Santo's Caroline Gulliver:

Overall we think Tesco’s strategy of transforming itself into a multi-channel retailer is the right one, but the transition process away from being a hypermarket led retailer will be painful and probably less profitable, both in the UK and internationally. We reiterate our Sell.

Capital MSL's Philip Dorgan:

The decision to exit the US is not unexpected and the main focus of these results will therefore be upon the shift in strategy to focus on generating positive free cash flow. We think that this will be taken well by the market, especially as it signals the end of the space race in the UK. We believe that there are three prime drivers of shareholder value: (1) UK recovery; (2) Lower capital expenditure and higher returns; (3) The online opportunity.