The Share Centre is confident Tesco can turnaround UK operations

As Tesco reports a fall in profits Helal Miah, investment research analyst at The Share Centre, recommends investors ‘hold'.

"Tesco reported a fall in annual profits for the first time in almost 20 years this morning as the costs of its turnaround strategy and losses at its US operations hit full year figures.
 
"It is no surprise to hear Tesco has announced it is pulling out of its Fresh n Easy brand in the U.S, which has been a drag on growth and failed to deliver, despite the CEO's confidence that it would break even by 2014.
 
"The retailer is making headway with its implementation of its turnaround strategy which is on track and showing promising signs. However, it's too soon to tell if this is the remedy to its woes in the UK, where sales have been further impacted by the horse meat scandal.
 
"Despite this morning's figures we remain confident in the retailer's management and their ability to turn the UK operations around. However, we believe the implementation of their new strategy and the regain of market share will take some time. Given that the global economic slowdown is likely to remain a challenge, as well as fierce price competition and promotions, we continue to recommend investors ‘hold' for now.