Tesco is one of the worlds leading international retailers. Since the company first the trading name of Tesco, in the mid 1920s, the group has expanded into different formats, different markets and different sectors. The UKs leading retailer Tesco was floated on the stock exchange in 1947 and in 1995 took over rival Sainsburys position as the UK number one. The principal activity of the group is food retailing, with over 2,000 stores worldwide. Tesco has a long term strategy for growth, based on four key parts: growth in the Core UK business, to expand by growing internationally, to be as strong in non-food as in food and to follow customers into new retailing services. The company launched a home shopping service in 2000, allowing customers to order their shopping online. Tesco is now expanding its convenience stores and overseas into areas such as Taiwan, Malaysia, Poland, the US and Ireland.

Upper graph = 12 month share price with 6 month moving average
Lower graph = 12 month volume (red line = volume average).

Tesco crisis continues as leading shareholder slashes stake

Mon, 01 September 2014

Pressure is growing on Tesco after one of its leading shareholders admitted it had cut its stake in the supermarket, deeming the retailer as being "too risky".

Chicago-based Harris Associates was Tesco's seventh-main shareholder with a 3% stake in the business, which has now been reduced by two percentage points after the US fund revealed it had sold two-thirds of its stake in August.

In a statement released over the weekend, Harris said Tesco had become too risky "to justify [having] a big position".

Speaking to the Sunday Telegraph, David Herro, chief executive of Harris, said he was waiting to see if Tesco had "a clear and coherent strategy" before making further decisions over his company's stake.

"I really want to see what the new chief executive is going to say - how he's going to deal with the issues," said Herro.

"If this thing is a turnaround story, we want to stay involved, but we need to hear a plan that makes sense."

Tesco lost over £1.3bn in share value on Friday, as its shares fell to 230p, an 11-year low, after the company issued its third profit warning in eight months and was forced to slash its dividend.

On Monday, Barclays cut its target price on the shares to 240p from 300p and maintained an "equal-weight" rating, on the same day when new chief executive Dave Lewis begins his career with the retailer.

Lewis, who has a proven track record with Unilever but has never worked in retail, has vowed to review "every aspect of the group's operations" as Tesco looks to halt the loss of market share to the likes of Aldi and Lidl.

Former Tesco chairman Lord MacLaurin said Lewis was "a very capable man" who "is going to have a really good look at all sides of the business".
"[Lewis] needs to find the finest marketing man he could possibly get, with a good background in strategy and knowledge of the business," MacLaurin said.

Analysts expect Lewis to adopt a drastic price-cut policy and slash the price of groceries, but even that might not be enough according to some, with Tom Stevenson of Fidelity arguing that "Buying Tesco now is a classic example of catching a falling knife".

Tesco shares were down 2.14% to 225.00p at 15:38 on Monday.

I think its going to take bigger things than slashing prices. Gross profit will be slashed then,. :-)). The floor space is far to vast. Personally I do not think shoppers will return. If it is all down to price they would be in Asda. Shopping needs have gone in a big circle( back to small stores) and as Aldi have said their shoppers are in and out in about half an hour. They are sadly in sinking sand and its going to be near impossible to get out.
Standards are going to fall with eventual mass layoffs in the near future if things do not pick up. Carrefour had similar happen in the 90's and have had to take the store back to basics to recover. They are on the way now, after 4/5 profit warnings .
Trouble is now the shopping public do not have the spare cash they had in the 90's,
after a very long recession.

Dave Lewis has no retail experience, Cannot see him holding his new post for very long.



Perhaps they should shut stores at night. Never understood why Tesco was one of the first to introduce the very expensive home delivery service. This alone is subsidised by the tune of £10/£15 per customer shopping in Tesco stores. All adds to the price of a basket of shopping. Slashing prices will lead to more major shareholders throwing in the towel, as returns will also be slashed.

StockMarketWire.com
Santander has reacted to Tesco's (LON:TSCO) latest profit warning and 75 per cent dividend cut by downgrading its recommendation to "hold" from "buy".

The company also announced that incoming Chief Executive, Dave Lewis, would be starting his role a month earlier than planned.

The broker said: "The total shareholder return argument for the shares is no longer valid, and given that the new management team may need up to six months to review the business, we see the shares as dead money for the coming months."

Analysts have also slashed their target price to 260 pence a share from 360 pence.

Separately, Societe Generale repeated its bearish "sell" call and pegged its target back to 190 pence (previously 220 pence).

"In our view Tesco is facing an emergency just as Carrefour was four years ago," SocGen said.

"The new management team will be under intense pressure to turn around the business and quickly take appropriate strategic decisions."

Irish customers deserting Tesco in favour of discount chains as market share continues to fall

By Rupert Steiner for the Daily Mail

Published: 22:40, 3 September 2014 | Updated: 22:13, 4 September 2014


The troubles facing Tesco’s new chief executive Dave Lewis are worse than first thought as the grocer’s Irish chain haemorrhages customers.



http://www.dailymail.co.uk/money/markets/article-2742725/Irish-customers-deserting-Tesco-favour-discount-chains-market-share-continues-fall.html

Trading Update

During its final preparations for the forthcoming interim results, Tesco has identified an overstatement of its expected profit for the half year, principally due to the accelerated recognition of commercial income and delayed accrual of costs.

On the basis of preliminary investigations into the UK food business, the Board believes that the guidance issued on 29 August 2014 for the Group profits for the six months to 23 August 2014 was overstated by an estimated £250m. Some of this impact includes in-year timing differences. Work is ongoing to establish the extent of these issues and what impact they will have on the full year.

The Board has asked Deloitte to undertake an independent and comprehensive review of these issues, working closely with Freshfields, the Group's external legal advisers.

We will provide a further update at our interim results, which will now be announced on the 23 October 2014.

red alert!! run for the hills!
bogof anyone < 200p today

Announcement:

For safety reasons shareholders must move out of the way until the decks have been cleared.

Only when shareholders can clearly see that the decks HAVE BEEN CLEARED, may they safely proceed back onto the ship.

Heading down to 160p? Won't be a surprise if it did!

Too late to short ?

The RNS announcements we are getting are not fit for purpose, IMHO.

Neither are the 'N' links on the MoneyAM live Stockwatch - we get only ONE 'N' when there may be additional announcements after an initial announcement.

Therefore, how is a user liklely to be come aware of any additonal announcments?
Answer: They aren't! It is not fit for purpose.

The CEO is now apparently VERBALLY stating at media interview that it may be that the profit discrepancy could be more than £250m and that the company won't know until it has finished its enquiry.

So how much is it likely to be? Is the £250m an overstatement or an understatement or just a figure plucked out of thin air, that might 'just serve to cover it...hopefully'?

From MoneyAM, here is the RNS announcement in its entirety:

TRADING UPDATE

RNS

RNS Number : 2186S
Tesco PLC
22 September 2014

News release…
Monday 22nd September 2014

TRADING UPDATE

During its final preparations for the forthcoming interim results, Tesco has identified an overstatement of its expected profit for the half year, principally due to the accelerated recognition of commercial income and delayed accrual of costs.

On the basis of preliminary investigations into the UK food business, the Board believes that the guidance issued on 29 August 2014 for the Group profits for the six months to 23 August 2014 was overstated by an estimated £250m. Some of this impact includes in-year timing differences. Work is ongoing to establish the extent of these issues and what impact they will have on the full year.

The Board has asked Deloitte to undertake an independent and comprehensive review of these issues, working closely with Freshfields, the Group's external legal advisers.

We will provide a further update at our interim results, which will now be announced on the 23 October 2014.

Dave Lewis, Group CEO:

"We have uncovered a serious issue and have responded accordingly. The Chairman and I have acted quickly to establish a comprehensive independent investigation. The Board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."

Contacts:

Investors: Chris Griffith 01992 644 800

Media: Tom Hoskin 01992 644 645
Brunswick 0207 404 5959

This information is provided by RNS
The company news service from the London Stock Exchange

END

TSTSEWSIEFLSEEU

Tesco’s unexpected item in P&L area
By Jonathan Guthrie

From: http://www.ft.com/cms/s/0/a5166e08-422d-11e4-a9f4-00144feabdc0.html

Tesco Plc, the U.K.'s largest retailer, reported the first profit drop in almost two decades after increasing investment to halt declining supermarket sales.

Ever been stuck behind someone at a supermarket checkout who hasn’t enough cash for their groceries? Embarrassing for them, as for Tesco, which says it will miss its first half trading profits forecast of £1.1bn by £250m due to accounting issues.

Worse, that original estimate, alongside a prediction of trading profits of £2.4-£2.5bn in 2014-15, was itself part of a profits warning issued less than a month ago. Today’s blow to the credibility of the supermarket chain is worsened by the doubt it casts over the veracity of its accounting. Four executives have been suspended.

The pitfall is the oldest one in the book: revenue recognition. When the numbers of a quoted business come unstuck, it is generally because income has been booked faster than is prudent. A common elaboration is for costs to have dawdled at the same time. Together, they drive up profits to improve the look of the P&L. Temporarily.

This is what happened at Tesco, according to a statement signed off by Dave Lewis, the ex-Unilever executive who replaced ousted chief executive Philip Clarke earlier this month. In dropping the words “integrity” and “transparency” into the conversation, he highlights the possibility that some colleagues may have exhibited shortcomings in those qualities.

But this is an organisation which has been under huge commercial strain, as revenue bleeds to cheap discounters and pricier chains such as Waitrose. Its difficulties have now been compounded. A question mark will hover over the accuracy of historic numbers, not just forecasts, until independent accountants Deloitte and law firm Freshfields have completed an investigation.

Similarly, a pall hung over the group numbers of insurer RSA after a £200m capital shortfall appeared at its Irish division in 2013. Here, profits were inflated by early recognition of premiums and the deferral of claims. Three executives were suspended and the Irish police became involved.

You might imagine that today’s bombshell gets Mr Lewis off to the worst possible start. Au contraire. The more shell-shocked staff and investors feel, the greater his license to change Tesco for the better. He should kick out floundering managers and dump loss-making stores. Mr Lewis has the opportunity to go in hard and should do so.

Lets face if, the discounters have always been around but the cold hard fact is that Tesco have lost market share not because of discounter competition but as a direct consequence of households having less disposable income.

This creates two big problems for Tesco, firstly can it compete on prices with the discounters and secondly, how does it go about winning back its customers.

Aldi, Lidl and Iceland have all been quick to capitalise on the extra footfall and have expanded shops and product range. Tesco however still has its ace, the clubcard to identify lost customers and try and tempt them back.

From: http://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11113002/Tesco-accounting-scandal-QandA-what-happens-next.html

Tesco accounting scandal Q&A: what happens next?

Tesco shares have fallen by 10pc after warning that profits have been overstated, but there could be worse to come
Tesco said Deloitte is to undertake an independent and comprehensive review

By Graham Ruddick10:58AM BST 22 Sep 2014

What exactly has Tesco found?
Dave Lewis, the Tesco chief executive, says he has discovered that profits for the six month to the end of August were overstated by £250m due to the "accelerated recognition of commercial income and delayed accrual of costs". In other words, Tesco has been paying suppliers later and taking monies from them earlier than it should have. Given that £250m represents roughly a quarter of profits, this suggest the practice was widespread in its UK business. Tesco has launched an investigation into the blackhole.

Don't all supermarkets play hardball with their suppliers?
Yes, but Tesco seems to have been taking this to extremes. Analysts at Cantor Fitzgerald warned last November that Tesco was boosting profits by £200 by deducting monies from suppliers’ trading accounts or extending payment dates without notice. This is a breach of the Groceries Supply Code of Practice, which was put in place last August, and if Tesco has breached contractual agreements and misstated financial accounts it could be even more serious than that. On the face of it, this behaviour would be a desperate attempt to protect that profits of a struggling retailer. Bruno Monteyne at Bernstein gives another example: "Tesco commercial director of department X is short his profit target; he/she discusses with supplier bringing forward a big promotion, funded by supplier; in return Tesco commits to doing three more new product launches in the next reporting period." This stretches and manipulates trading figures, but ulimately they catch up with a company.

Are we talking about fraud here?
At this stage, Tesco is playing that down. However, Deloitte and lawfirm Freshfields have been called into investigate, while the leading City regulator, the Financial Conduct Authority, has also been contacted. This suggests Tesco may suspect there has been foul play. On the otherhand, some City analysts are suggesting this is an example of Dave Lewis, the new chief executive, "kitchen sinking" the accounts and resetting Tesco. In other words, what has happened was not illegal, but not the sort of behaviour he wants in his company. Lewis has said that he has never seen anything like this and that it is "out of the ordinary". In the stock market statement he said Tesco must "operate with integrity and transparency". Bruno Monteyne at Bernstein says it is an attempt to "clean up the accounts and change the culture".

Have people been suspended over this?
Four senior members of staff have been suspended while this takes place. They include Chris Bush, the UK chief executive and Carl Rogberg, the UK finance director. Dave Lewis says this is not Tesco disciplining the four bosses, but so the company can conduct the "fullest and deepest investigation possible". Robin Terrell, who runs the company's online empire, has been put in charge of the UK business.

Is former chief executive Philip Clarke connected to this?
Philip Clarke was sacked as Tesco chief executive in July and left the company's offices in August after another profit warning. He oversaw three years of declining sales as Tesco lost shoppers to the discounters, Aldi and Lidl, and upmarket Waitrose. He, along with outgoing finance director Laurie Mcllwee, are likely to be questioned in the investigation. The blackhole does not reflect well on Clarke's tenure at Tesco - either he lost control of the company's operations, or he authorised the practices that Dave Lewis has identified as he tried to protect the company's margins in the face of falling sales.

How was the blackhole discovered?
A member of staff, whose identity has not been disclosed, approached Tesco's general counsel on Friday to warn that something was array in the accounts. This information was then passed on to Dave Lewis, who spent the weekend analysing the scale of the problem.

What does the City think of all this?
Tesco's share price has fallen more than 10pc and analysts are in shock. Clive Black, analyst at Shore Capital, said he was "flabbergasted" that this could happen at a FTSE 100 company and warned these are "serious times" for Tesco. However, Bruno Monteyne at Bernstein praised Dave Lewis for his attempt to get Tesco back on track.

Surely the chairman, Sir Richard Broadbent, cannot survive this?
Sir Richard has now overseen three profit warnings in a matter of weeks. He was decisive in removing Philip Clarke, but now faces serious questions about the quality of the governance at Tesco. "Shareholders will have to decide whether I am part of the problem or part of the solution," he said on Monday morning.

When will the details of the investigation be revealed?
Tesco has delayed the publication of its interim results by three weeks to October 23, we are likely to get more details then.

anybody buying on here? looking to buy @200

Could be a good trader up and down alders. Get the 10 minute chart and 5 minute chart set up on it, but dont take your eyes off it.

Nomura Neutral 203.00 203.00 220.00 200.00 Reiterates

JP Morgan Cazenove Underweight 203.00 203.00 210.00 185.00 Reiterates

Deutsche Bank Hold 203.00 203.00 250.00 220.00 Reiterates

Notification pursuant to Listing Rule 9.6.11

Pursuant to Listing Rule 9.6.11, and further to Tesco PLC's announcement on 28 July 2014, the Company announces that Alan Stewart will join the Board as Chief Financial Officer with effect from 23 September 2014, rather than the previously announced date of 1 December 2014.

the worry in the city is how deep the rot goes - is this just the tip of the iceberg
gla

parachutes lol