"- Tesco's operating margin is 5.8% compared with wow's 4.5% and...

"- Tesco's operating margin is 5.8% compared with wow's 4.5% and Coles 3.7%.
- Most interesting is the property strategy, Tesco prefers to own its property, while wow have long term leases and recently and correct me if I am wrong sold its property and leased them back."


I am not sure whether Tesco is more advanced than WOW, I havent looked at Tesco's numbers in much detail, I tend to look more at Walmart to get an idea as to where WOW are headed.

Clearly there are no free lunches, so Tesco may have higher operating margins because they dont pay rent, but WOW has almost twice as high Return on Capital.
I prefer the WOW low asset model. Its more flexible and allows for expansion with less capital employed.

From the same Tesco Annual Report you quoted the 5.8% Operating Margin number, here are two other passages :

"Return on Capital Employed. In April last year, we renewed our commitment to increasing our post-tax return on capital employed (ROCE), having exceeded our 2004 aspiration two years early. We set a new target to improve ROCE by a further 200 basis points. The strong performance of the business delivered slightly higher ROCE in 2006/7 – at 12.6% (last year
12.5%)"

CK Notes WOW ROCE 40-50% (albeit pre-tax in the 2002-2005 period)

"RELEASING VALUE FROM PROPERTY
As announced last April, we plan to release cash from property through a sequence of joint ventures and other transactions, both in the UK and internationally and return significant value to shareholders"