The Tesco (LON: TSCO) share price will be in the spotlight today after the relatively weak UK retail sales numbers. The stock declined to 240p on Thursday, ending a relatively remarkable rally. The shares will also be in focus after another bidder for Morrison’s emerged.
UK retail sales plunged
The Tesco share price will be watched after the Office of National Statistics (ONS) published the July retail sales numbers. The data showed that the volume of retail sales declined by about 2.5% between June and July. This was after the sales rose by 0.2% in the previous month. The sales rose by 2.4% on a year-on-year basis. Meanwhile, core retail sales declined by 2.4% after rising by 0.3%.
These numbers were notable because of the weak non-food store sales, which declined by 4.4%. As the Delta variant cases rose, the proportion of online sales rose to 27.9% to 27.1%. Therefore, with the number of Covid cases rising, there is a likelihood that the country’s retail sales will remain being under pressure in the next few months. This, in turn, will affect Tesco’s business, because of its large retail presence.
Meanwhile, the Tesco share price will be watched because of the ongoing fight for Morrison’s. The company accepted a 7 billion pound deal by Clayton, Dublier & Rice (CDR). The private equity firm counts Sir Leahy Terry as one of its partners. He was once the CEO of Tesco. This is notable since the current Morrison’s CEO and Chairman used to work at Tesco.
Tesco share price forecast
The daily chart shoes that the Tesco share price pulled back recently after the stock reached the resistance at 247p. In my view, this pullback was expected since that was the highest level early this year. At the same time, the shares are also being supported by the 25-day and 50-day moving averages.
Therefore, in my view, while the TSCO share price could pullback further, I suspect that the stock will bounce back soon. If this happens, the next key resistance level will be at 250p then 260p. The bullish view will be invalidated if the price declines below 235p.