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Tesco and Morrisons stocks rate of return declines by around 30%

Published:  19 August, 2014

Both Tesco (LSE:TSCO) and Morrisons (LSE: MRW) stocks rate of return have declined by nearly 30% over the past year, further signalling the challenges that middle priced grocery chains are facing in the supermarket price wars.

Both Tesco (LSE:TSCO) and Morrisons (LSE: MRW) stocks rate of return have declined by around 30% over the past year, further signalling the challenges that middle priced grocery chains are facing in the supermarket price wars.

Tesco's one-year rate of return is -28.64% and its stock price is hovering just above the 52-week low of £241.30 at £249.40. The company's stock took a hit this week on news that it may cut its dividend. Since the announcement on July 21 that chief executive Philip Clarke was being forced out, the stock price has declined by 14.1%.

Morrisons has faced a more rapid decline; its one-year rate of return is -34.91%. In June Morrisons announced it was planning on cutting 2,600 jobs as part of a new management structure. The same month Morrisons also announced that it would be closing its online wine site, Morrisons Cellar and integrated the website with its grocery site.

Sainsbury's (LSE: SBRY) was the least scathed by the supermarket wars and its one-year rate of return is -16.09%. 

Earlier this month the British Retail Consortium announced that like-for-like sales for the month were down by 0.3% which was a big drop compared to the rise of 2.2% that was seen in 2013 for the same period. Additionally the BRC reported that food sales have dropped by 3.5% in the three months to July.

With the exception of April this year, which got a boost thanks to the Easter holidays, like-for-like sales have fallen in value every month for the last 12 months.

The big four supermarkets - Tesco, Asda, Sainsbury's and Morrisons - are losing market shares to newcomers such as the lower priced chains Aldi and Lidl.  Last month, Kantar Worldpanel reported for the 12 weeks ending on July 20, Aldi recorded a 32% growth rate increase its market share from 3.7% to 4.8%.

Despite the challenges that giant supermarket retailers are facing, Sainsbury's was able to maintain its market share of 16.6% for the same period.

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