Inflation Hurts Tesco's Growth Prospects

As a consequence of persistent inflation, Britain's largest grocer is unable to deliver a profit increase in 2024. In spite of this, Tesco has maintained a roughly 27% market share in spite of a price battle with discount chains that has heat up. In addition, Biden continues his Irish tour and plans to meet politicians in Dublin on Thursday.

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The following are the top business stories from London this morning:

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Living in the city

There is encouraging news for Darktrace Plc, a leader in cybersecurity, based on the recent release of strong preliminary margins and its plans to extend operations and invest in the fourth quarter.

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• According to the new forecast, the company anticipates its adjusted Ebitda margin for 2023 at or around 19% versus 16%-18.5% previously, and its revenue growth over the prior year is expected to be at or near 30 percent as opposed to the previous range of 29.5%-31%.

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The largest British grocers, Tesco, reported adjusted operating profits of £2.63 billion, which was in line with analyst estimates, as well as sales growth across all its operations in 2023, which was in line with analyst expectations.

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• As a result of what Chief Executive Ken Murphy called "unprecedented levels of inflation," the retailer anticipates its retail adjusted operating profit to be "roughly flat" in 2024.

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• As inflation fuels a price battle against discount supermarket chains, Tesco announced a reduction in milk prices on Wednesday, extending a price freeze on over 1,000 everyday items. Tesco is the first major retailer to announce a milk price cut in over three years

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With sales expected to grow stronger in the second half of the year, Imperial Brands Plc's revenue performance is expected to meet its full-year expectations. This tobacco company has been beating full-year expectations for years. 

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• In spite of the fact that Blu branded vapes have suddenly become more popular in recent years, its makers still expect their first-half net revenues to be similar to last year at constant currency, excluding the impact caused by the company's exit from Russia.

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Listed company Home Reit Plc has said that it has been in talks with Bluestar Group and that these talks are still ongoing, announcing that the company has requested another extension to the deadline for Bluestar to confirm whether it will make a formal offer on the company or not, as result of the extension.

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The Westminster area

In his statement on Wednesday, Chancellor of the Exchequer Jeremy Hunt said that the UK economy will fare significantly better than the bleak outlook of the International Monetary Fund over the next 24 months, possibly leading up to the government's next spring election campaign. He also reaffirmed Prime Minister Rishi Sunak's commitment to stability in remarks he made in Washington on Tuesday. Hunt rejected the IMF's forecast of the UK shrinking 0.3% this year and just growing 1% in 2024.

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According to the White House, US President Joe Biden is expected to meet with both Irish President Michael D Higgins and Irish Taoiseach Leo Varadkar this Thursday in Dublin for a meeting, as they are both officials of the European Union.

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For Those Who Didn't Catch It 

It doesn't matter if there is garbage on the streets of the French capital, the French capital continues to be a big winner in the aftermath of Brexit's first act. As Paris becomes increasingly important for global finance, President Emmanuel Macron's business agenda is being examined in this week's In the City podcast. Listen here: 

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Taking a look ahead

A number of companies will be providing an update to investors on their performance as we approach the end of the week, including Hays Plc, a recruitment company, and Dr Martens Plc, a footwear company. 

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According to Trade Algo, mid-income households will have tighter discretionary spending in the fourth quarter, so the bootmaker's sales should mirror the third quarter's. A BI analyst Andrea Ferdinando Leggieri and Deborah Aitken wrote, “In Europe, direct-to-consumer sales could drive growth, but in the US, bottlenecks may limit sales at the Los Angeles distribution center.”