Football Forum | Ticket Forum | Off-Topic Forum | All

w4hammer 2:17 Mon Sep 22
Tesco in freefall

http://www.theguardian.com/business/2014/sep/22/tesco-investigators-overstating-profit-250m

Just about every pension scheme in the country is overloaded with this stock...!


Tesco has suspended the head of its UK business and called in independent accountants and lawyers to investigate its finances after discovering that its guidance to the City overstated expected first-half profits by about £250m.

The supermarket group, led by new chief executive Dave Lewis, has asked accountants Deloitte and Freshfields, its legal advisers, to scrutinise the overestimate at its troubled UK food business. PwC are Tesco’s usual auditors. The retailer has also contacted the Financial Conduct Authority, the City’s chief regulator.

Tesco shares fell almost 8% to an 11-year low of 212p making them the biggest faller in the FTSE 100 index and wiping £1.5bn off the retailer’s market value. More than £6bn has been wiped off share value since 21 July, when the previous chief executive Phil Clark was ousted.

On 29 August, Tesco warned investors to expect profits of about £1.1bn for the six months to 23 August, down from £1.6bn a year earlier. Discovery of the overstatement of revenue paid to Tesco by its suppliers means the supermarket’s first-half profit will now almost halve to about £850m.

Lewis, who joined three weeks ago after 27 years at Unilever, said he had never seen revenue accounted for in this way. “Certainly not in my Unilever career,” he said.

Lewis said four top managers had stepped aside from their jobs while the investigation takes place. Chris Bush, the company’s UK managing director, is understood to have been replaced by Robin Terrell, Tesco’s multichannel director.

The overstatement was discovered when a whistleblower alerted Tesco’s general counsel on Friday afternoon.

Lewis said the general counsel then informed him and Tesco spent the weekend scrutinising the food business. He said the problem was not in the ordinary course of events and that rules may have been broken.

“We have asked four people, senior people, to step aside. That is across commercial and business operations.

“We are clear there is an issue here. We will let the investigation determine whether any rules were broken and what I need to do to address that.”

Analysts pressed Tesco’s chairman, Sir Richard Broadbent, about how the accounting problem went undiscovered until just over a week before the planned announcement of first-half results. Clive Black, an analyst at Shore Capital, said Broadbent’s position was untenable because he had left the board without a finance director.

Tesco recruited Alan Stewart from Marks & Spencer in July as its new finance director but he is not due to join until December. His predecessor, Laurie McIlwee, resigned and left the board in April but agreed to stay on to hand over.

Black said: “It’s been a total failure of governance. The finance director announced he was going in April. For a period they’ve been rudderless in that respect.”

Broadbent said McIlwee had not been involved in “recent days and weeks” and that the finance operation had carried on effectively without him. He declined to say when McIlwee was last in the office.

He denied that the board should have been expected to spot the problem and said it had stepped up scrutiny of commercial revenue, including payments by suppliers for instore promotions.

“At the end of last year after looking carefully at it, it was signed off by external auditors.” PwC remains Tesco’s auditor but Deloitte has been called in to make an independent judgment, he said.

The accounting problem has forced Tesco to delay its first-half results from 1 October to 23 October. It is the latest blow to Britain’s biggest supermarket group,.

Broadbent said Clarke was involved up until his last day on 1 September. Asked if the company will seek to reclaim bonuses from executives due to the overstatement, he said the board would take “all necessary actions”.

Last month, unveiling its second profit warning in two months, the retailer said it would be slashing its half-year dividend by 75% and that full-year profits would be £2.4bn to £2.5bn, down from its previous forecast of £2.8bn. Last year, the group posted profits of £3.3bn.

____

Worked for a company who had a similar situation once- and the new CEO that came in loaded everything in straight away to lose all the bad news- his comment when I asked why he was painting such a black picture from the outset...

" If you've got to east shit, dont nibble...." !!

stewie griffin 11:34 Thu Apr 23
Re: Tesco in freefall

*shrugs*

To be honest, I don't really care, we did all this 6 months ago when this thread was started. At that time, all the various experts on here - fed by the Guardian and BBC - were saying the same things you are now, and predicting a continued decline.
Goose and I said it was a good time to buy.

Share price went down to 155, and was 250 last week. It dropped a small amount yesterday, and will recover quickly.

I'm easy, I'm winning. Just trying to help.

goose 11:30 Thu Apr 23
Re: Tesco in freefall

".Like for like sales both quantum and profit are down and have been trending that way for some time. They are losing market share at both ends of the scale. To my knowledge no one is looking to fill the void they may leave just compete (successfully) for constituent parts of their market share."

not strictly true.
sales are down LFL but the last quarter saw a stronger performance in LFL sales (they went from approx -4% to -1%). more importantly LFL volumes are up, so people are buying more but tesco have invested in price.
also kantar data and tesco transaction data is up LFL for last quarter, showing that more people are shopping at tesco.

the actual cash loss for £600m, of which about £400m was the office restructure.

Northern Sold 11:30 Thu Apr 23
Re: Tesco in freefall

`The Meat from Costco is excellent.



Agreed Joe... steaks are excellent

lincshammer 11:26 Thu Apr 23
Re: Tesco in freefall

The simple fact is the buyers at any company are there to get the best price possible for the company they work for. If you know that you are a large customer that a supplier is heavly reliant on (and you can easily find other suppliers) then you the going to use that to your advantage. If that means reminding them of that fact now and again then so be it!

ATHammer 11:23 Thu Apr 23
Re: Tesco in freefall

Stewie Griffin,

"If they die few will mourn their passing" is what I said.Like for like sales both quantum and profit are down and have been trending that way for some time. They are losing market share at both ends of the scale. To my knowledge no one is looking to fill the void they may leave just compete (successfully) for constituent parts of their market share.

Tesco are under input (people are wary of working for/with them) and output (quality/price/service/public sentiment/alternatives) pressure and that is not a great place to be as a business.

Quoting how much is spent right here right now is a bit like Nero and his fiddle, what business can post repeated record losses and be continue to trade?

Tesco will either adapt or die.

Fact not opinion.

stewie griffin 11:18 Thu Apr 23
Re: Tesco in freefall

Wouldn't say I don't have sympathy for them, just its the same in every industry. There's nothing unique about it. Just how it is, rightly or wrongly. I'm going through an exercise to do the same thing with our suppliers at the moment.

goose 11:15 Thu Apr 23
Re: Tesco in freefall

Robson 11:12 Thu Apr 23
Re: Tesco in freefall

sorry but that's bollocks. ten years ago maybe but the buyers are governed by very strict rules and working practice. if the supplier has an order it is legally binding and tesco are obligated to pay whats agreed.
as we are told time and time again, you can request but you cannot require.

there is actually an anonymous phone line that suppliers can call if they feel they are being treated unfairly.

Robson 11:12 Thu Apr 23
Re: Tesco in freefall

I always assumed low priced milk etc was a loss leader that Tesco was absorbing. Now we know they are ruthlessly squeezing suppliers it actually puts me off them and other shops who offer these staples at knock down prices.

Stewie you may not have sympathy with suppliers being squeezed, but there are other examples like them making very large specific orders and then trying to renegotiate at the last minute, blatantly breaking the terms of the deal, leaving the supplier with no choice but to accept the lower price or be left with stock they can't offload elsewhere.

Joey Woodwork 11:04 Thu Apr 23
Re: Tesco in freefall

The meat we have had from Aldi has been very good, certainly better than what we got from Sainsburys/Tesco, doesn't compare to a Butchers obviously,

The Meat from Costco is excellent.

Northern Sold 11:01 Thu Apr 23
Re: Tesco in freefall

Eddie B 11:18 Wed Apr 22
Re: Tesco in freefall

Lidl and Aldi are killing them.




Won't ever shop there again... their meat was pure scum.... never knew that Chicken should be sold grey and soaking wet... and their mince was not much better... told my missus if she ever shops there again I will divorce her.... oh and let me assure you it will be HER loss

HairyHammer 10:57 Thu Apr 23
Re: Tesco in freefall

They got too greedy and wanted to flood the market with stores without taking into account what may come ie the recession. "Greed Is good", screwed them.

goose 10:23 Thu Apr 23
Re: Tesco in freefall

few "call outs" from yesterdays announcements...........
number of transactions is way up for the last quarter as well as much improved sales figures.
so more people are shopping at tesco and they are buying more stuff.

anyone with any sense would have bought the shares fairly cheap over the past year.

stewie griffin 10:05 Thu Apr 23
Re: Tesco in freefall

ATHammer 9:58 Thu Apr 23
Re: Tesco in freefall


Yes, they're very likely to die.

£1 in every £8 spent in British shops is spent in Tesco. After the worst year in their history, they made cash profit of £1.5 billion. Their market share is 29% - more than Aldi, Lidl, Waitrose, M&S, Iceland & the Co-Op combined.
Chuck Asda and Sainsburys together, and you just about have the same market share as Tesco, with nothing like the profit.

Death is imminent.

Jesus Christ.

ATHammer 9:58 Thu Apr 23
Re: Tesco in freefall

Change in the wind. Those with little disposable income will use Aldi; Lidl; Poundstretcher etc. If they want to shop big will go to Costco and Asda. Those with more disposable income will tend toward Waitrose and M & S Simply food. Those with more cash are also tending toward local butchers; fishmongers; farm shops; etc. who offer value, service and quality. Internet providers that offer reliability and convenient deliveries have stolen a march which the supermarkets did not see coming and responded far too late. There is also a backlash as potential staff and suppliers look to work with reasonable employers and clients rather than those with a bullying and bad paying reputation.
There is truth in the argument that we want to pay a little as possible, particularly when money is tight. However the best deal also means good service and dealing with a supplier with a culture we associate with at whatever end of the social spectrum.
Sainsburys and Tesco need to adapt or die and if Tesco die few will mourn their passing.

After8 2:10 Wed Apr 22
Re: Tesco in freefall

Tesco pushes it's suppliers hard because the public push Tesco hard for deals, Everyone thinks their special and deserve " treats " and no one likes to.pay more, we all want a "deal" particularity women.

So people who complain about Tesco pushing suppliers ought to take a look at themselves first.

, 12:45 Wed Apr 22
Re: Tesco in freefall

Aldo and Lidl are simply sticking to their knitting and getting on with their tried an tested business model. The big retailers were not watching them as they began to make inroads into their customer base.

The British public have been rightly branded as moaners by Griffin but it seems with the big supermarkets customers have not moaned so much as removed a portion of their custom. It's working too because the Aldi/Lidl competitors are having to work hard to retain, let alone regain, market share.

Eddie B 11:18 Wed Apr 22
Re: Tesco in freefall

Lidl and Aldi are killing them.

goose 11:09 Wed Apr 22
Re: Tesco in freefall

if a supplier gets "balls deep" in with tesco it is their own fault.
as a retailer we spread the risk on our supply base and will never become too heavily commited with one particular source - purely for the reason if something happens both of us are fucked.

1964 11:08 Wed Apr 22
Re: Tesco in freefall

What makes me laugh is that papers like the Daily Fail are putting this loss down to people deserting Tesco for Lidl/Aldi. What a joke!

So Aldi and Lidl have picked up this 6 billion in sales have they? Bollocks!

Can't compare the two. Lidl/Aldi are nowhere near the quality of Tesco or it's services: No petrol, No Toilets, No Cusotmer Services, No Credit Cars, No fresh food counters.

OK if you want ot buy an air compressor or horse riding whip though. Joke shops!

lincshammer 10:55 Wed Apr 22
Re: Tesco in freefall

I agree with that Stewie, with the industry I work in certain businesses make it all too easy for any big supermarket to squeeze the life out of them. They get over excited about supplying a certain business and the promise of a huge growth in turnover, what they fail to do is ensure they don't become over realiant on one sector, thus tesco or whoever can account for 80-90% of turnover and they have you by the bollocks. It's not tescos duty to look after your profitability.

stewie griffin 10:43 Wed Apr 22
Re: Tesco in freefall

*chuckles*

The land acuqisition piece is actually a criticism that is probably fair enough. The supplier piece I just find odd. Doesn't matter the industry, big companies are known for squeezing their suppliers/sub-contractors. It's just a fact of life. They even ran a Panorama programme about it, and there was absolutely nothing nasty that they could uncover, just suppliers profits being squeezed.
Could have been made about any office, anywhere in the country.

Just very typically British that we have to find something to moan about.

Page 1 - Next