Reliance upon the UK market

Although international business is still growing, and is expected to contribute greater amounts to Tesco's profits over the next few years, the company is still highly dependent on the UK market (73.8% of 2003 revenues). While this isn't a major weakness in the short term, any changes in the UK supermarket industry over the next year - for example, like the Morrison's group successfully purchasing the Safeway chain - could alter the balance of UK supermarket power, and affect share.

Debt reduction

Tesco is not expected to reduce its debt until at least 2006. Tesco has a large capital expenditure program - mainly due to its huge investment in space for new stores. Since its expansion is so aggressive, Tesco has little free cash for any other operations.

Signs point to serial acquisitions

With an enterprise value of £23 billion, Tesco clearly has enormous firepower. Also, its product range is vast and almost any acquisition can be justified,......

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Title: Tesco
Approximate Word Count: 281
Approximate Pages: 2 (250 words per double-spaced page)

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