Tesco joins forces with French giant Carrefour

The agreement aims to boost purchasing power for both parties

Article updated: 2 July 2018 12:00pm Author: Ian Forrest

Tesco have this morning announced its intention to enter into an alliance with French supermarket giant Carrefour which should enable both companies to negotiate better terms with their major product suppliers.

The plan to form a global long-term purchasing alliance should lead to lower prices on some goods for Tesco’s UK customers. Given the intense competition in the sector it is perhaps no surprise to see such a deal and the agreement (covered by a 3-year framework) should be signed within the next two months.

This news should be well received by Tesco and its shareholders. The stock has already seen a good rise over the past year and this agreement should aid the continuation, especially in the battle with discounters such as Aldi and Lidl, as well as the growing challenge from Amazon. The news comes shortly after the group’s decision to streamline its business through removing well-known brands in a bid to beat Aldi and Lidl. Elsewhere the grocer has just days left of Tesco Direct before it closes for good.

Last month, Tesco reported its tenth consecutive quarter of rising sales and confirmed the steady recovery seen under CEO Dave Lewis. Investors backing the management and the signs of improvement in recent results will have to be patient, but could be rewarded further in the near-future.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.