Finance, Forex and Investments

How does the exchange rate affect Tesco?

Now that tescos is expanding into different continents other than the Uk i was wondering how the exchange rate affects tescos. E.g £ to €

Public Comments

1. They don't sell the same stuff in the overseas Tescos. Also the pay is local so their costs are lower.
2. The Brit Pound is a strong currency so anything it exports would be more expensive for the buyer and imports would be cheaper. This means greater profits from sales of cheaper imports ( which means getting value for each purchase). As a retailer, it wouldn't be exporting much ( except the branding presence.
3. Exchange rates are critical when businesses do foreign trade, either importing or exporting or when they have international operations. Because the £ is quite weak meaning it has lost around 20% of its value against the euro, whenever Tesco buys anything from the Eurozone, it will cost more money to pay for them, if they can't pass on that increase in cost to the consumers in terms of rising prices, then their profit will go down. However if Tesco has stores in the Eurozone, any profits in Euros will be a lot more when converted to £. British products exported to the Eurozone are cheaper now for Eurozone importers, making them more affordable. this may result in increase in sales.