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).

The TESCO Bank is only worth what it is now because about 90% who bank there are Tesco customers , without the Tesco stores how many would bank with them ?

Exec - sorry boredom is an annoying sidekick :-)

LONDON, Oct 16 (Reuters) - Warren Buffett, the billionaire
chairman and chief executive of conglomerate Berkshire Hathaway
BRKa.N , has cut his vehicle's stake in troubled British grocer
Tesco TSCO.L to below 3 percent, according to a stock market
notification.
The filing, published on Thursday, said that on Oct. 13
Berkshire reduced its Tesco holding to "less than 3 percent".
Earlier this month Buffett said Berkshire's investment in
Tesco was a "huge mistake."
Berkshire had a roughly 3.96 percent stake in Tesco's
shares, according to an early May regulatory filing.
Tesco is reeling from an accountancy scandal and a downturn
in trading. Its shares have fallen 48 percent so far this year.

From: http://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11171562/Tesco-suspends-three-more-executives.html

Tesco staff 'misled auditors’ over black hole
Source reveals the practices that led to Tesco's £250m accounting shortfall

By Graham Ruddick7:15PM BST 18 Oct 2014

Comments: 19 Comments

The investigation into the £250m accounting scandal at Tesco is understood to have uncovered evidence that a “small group” of people within Britain’s biggest retailer deliberately misled its auditors and accountants to flatter its financial results.
A senior source close to the investigation said the practices had been going on for “more than a year” on a smaller scale, but ramped up in the last six months as the pressure on Tesco sales increased.
Tesco will, on Thursday, provide the first details into the £250m accounting scandal that has rocked Britain’s biggest private employer.
The Telegraph understands the scandal involves Tesco booking supplier contributions that were conditional on hitting sales targets that it was not going to reach.
It is understood that a “small group” of employees, realising these sales targets would not be hit, struck deals with suppliers to still make these payments by offering benefits in the next financial period. These benefits were kept secret and in the worst-case scenario involved Tesco actually paying money back to the supplier in the next period.
The source said the situation at Tesco was “very serious” and was “not an accounting issue” but the result of “inappropriate behaviour”. The source added: “There was a deliberate intention not to be upfront with the auditors.”
The revelation that the practice has been going on for more than six months will concern Tesco investors, who have already seen the value of the company fall by almost half in 2014. However, they will be relieved if the evidence suggests there was not a widespread issue within the culture of the company.
Sources within Tesco have confirmed there was concern among the company’s finance team and auditors for some time over its commercial income, because it was remaining flat while sales were falling.
PwC, Tesco’s auditors, took a detailed look at the retailer’s commercial income earlier this year and warned there was a “risk of manipulation”. However, on the basis of the information available, Tesco’s accounts were given a clean bill of health.
The issue with Tesco’s commercial income was revealed to Dave Lewis, the new chief executive, by a whistleblower in the company’s finance department. This prompted Mr Lewis to alert investors and bring in Deloitte and Freshfields to lead an investigation. Eight executives, including UK boss Chris Bush, have been suspended.
The early findings of this inquiry will form part of Tesco’s interim results this week. The investigation is still ongoing, but Mr Lewis said in a memo to staff that Tesco will provide a “clear and accurate indication of our income for the first half of the year”.
The evidence uncovered by Deloitte and Freshfields is likely to provide grounds for the City regulators, the Financial Conduct Authority and the Financial Reporting Council, to press ahead with their investigations into Tesco.
Shares in Tesco are down by 48pc year-to-date, and last week it emerged that Warren Buffett’s Berkshire Hathaway, one of the company’s biggest shareholders, is selling down its stake.
Following the discovery of the £250m blackhole, Tesco is expected to report trading of roughly £850m for the six months to the end of August, almost half the £1.6bn reported in the same period last year.
This will be the first set of financial results to be presented by Mr Lewis, who replaced Philip Clarke as chief executive on September 1. However, the former Unilever executive is not expected to reveal a strategic overhaul of Tesco. Instead, he only intends to inform the market after changes – such as a cut in prices – have been made.
There has been speculation in the City that Mr Lewis could announce a rights issue or asset sales – such as the disposal of Tesco’s business in South Korea – to shore up the balance sheet. However, this is unlikely.
Tesco declined to comment.

Here are the Comments thus far - and "very interesting too" are some of them:

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Reboon • 23 minutes ago
Through chance, I've noticed something which must be costing Tesco a fortune. It's something which benefits the observant customer. I wonder how many other people have noticed it.

What I have noticed must certainly be a factor in money "vanishing" in an undetermined way. Maybe they think staff are stealing. I don't even want to give a clue in case Tesco realise. I can only assume they haven't realised as it surely wouldn't be possible if they knew :-D
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Graham • 28 minutes ago
PWC identified a “risk of manipulation” but didn't fully investigate that risk, sufficient to satisfy themselves that nothing was wrong? If they did properly investigate then why did they find nothing; if they didn't properly investigate then they are guilty of professional misconduct. So, it is either an inadequate investigation or an inadequate investigation. Guilty as charged, m'lud.
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beatonthedonis • 39 minutes ago
If they can lie to a big-four accounting firm and their investors over £250m, imagine what they could do when it comes to what you put in your mouth.
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bill40 • an hour ago
Jolly good the "a few rotten apples defence". A report by Citibank in 2010 had already drawn attention to the systematic corruption that we now know exists. So four years documented and many more to come I don't doubt.
Anyone falling for this guff deserves shooting.
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Tsavor • an hour ago
Power corrupts and Tesco and it's employees have for years believed they have had absolute power over their suppliers. Stories of MD's of suppliers providing the goods and doing the cooking at category buyers annual barbecues, might just be urban myths or then they could be true.

I've seen with my own eyes letters and invoices from Tesco demanding payment just for the privilege of doing business with them, and I've been out of the food industry for 10 years, so nothing new here.
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Mary1958 Tsavor • 18 minutes ago
I think the practise of "seller contributions" is more shocking than Tesco fiddling the books.
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taguntumi Tsavor • an hour ago
Amen.
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Jeff Kaye • an hour ago
There is a cultural problem at Tesco that needs to be solved - not just accounting and not just a few people - why were those "few people" so focused on doing wrong? It has been a corrupting culture. http://jeffkaye.wordpress.com/... ????
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NeedaSpliff • 2 hours ago
Jail the Tesco managers and the Partner responsible for the "independent" audit..
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Alan Llandrindod Wells NeedaSpliff • an hour ago
What about the directors?
It happened in their companies on their watch.
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NeedaSpliff Alan Llandrindod Wells • an hour ago
Agree
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theresap • 2 hours ago
This article has been placed to deflect attention from the auditors who knew exactly what was going on but it was a good fee
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davidraynes • 2 hours ago
If a small group inside the Company deliberately conspired to rig the figures (and thus the share price) and this action deceived the public and created a false market (which the insiders were able to understand and take advantage of), that looks like fraud.

It looks very much as if some collars need to be felt and Inspector Knacker needs to get moving.

How many more knew?

The auditors have not done well either. same old thing one suspects, the business is their master and paying their bill,
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Alan Llandrindod Wells davidraynes • an hour ago
Think of the auditors that did the bust, price fixing, money laundering, sanctions busting, fraudulent banks.
Then think big 4. They never noticed?
Nuff said.
All the stores directors will claim that they did not know what was happening in their company, on their watch.
The Establishment will close ranks, and some clerk will end up in court.
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MCFC1894 • 2 hours ago
Every fiddle helps!
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Guest • 2 hours ago
"Of course the auditors will conclude that Tesco misled the auditors."

Agree. Auditors don't look hard enough, usually the person actually doing the audit is 22 and straight out of university.

Having worked for major suppliers to Tesco, it was not an uncommon occurrence to get mugged at their year end, with promises of better shelving or better promotional slots next year. The amounts were rather large and we weren't their biggest suppliers.

Paying out on a over rider when they didn't reach their targets, yeah seen that many times.

It's been happening for years, the fact that they claim it is just the last six months makes me laugh. All that's happened is that they are finding it increasingly hard to deliver on promises to suppliers in the following years.

One of my fondest/happy memories was kicking Sommerfield as they went down... a reward for the pleasure of working with them post acquisition (the up they forecast).
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Shaun Power • 2 hours ago
There is a very fine line between illegality and what became, over time, typical Tesco practice. That line, was, is (possibly), wafer thin. Quite frankly they throughly deserve the kicking they're currently getting.
We worked for them as a supplier for 25 years...and incrementally it became worse and worse until we'd had enough and when we finally could no longer meet their 'terms' they fired us. What a relief.

So long, and thanks for all the fish.
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Moneycircus • 3 hours ago
Of course the auditors will conclude that Tesco misled the auditors.

Having blamed Tesco, it is mutually convenient that the auditors should assure us this involved just a "few bad apples" on Tesco's shelves.

The auditors' evidence appears to confirm what several observers have suggested - that the statements were distorted by deals with suppliers.

Since Tesco's M.O. is to screw suppliers into the ground, we may suspect that the real misinformation here does not relate to promising "benefits" to suppliers.

Rather some more complex misdemeanor is likely to have been involved given that the methods Tesco uses with its suppliers are, exactly, complex.

I'd like others to help me with information but with wine it goes something like this:

You, Mr Winery, have a good reputation for your wine and we'd like to list you. But your wine is too expensive. We'd like you to make a cheaper version for Tesco. Of course you and we shall brand it as the regular product.

You commit to producing a certain number (in the 100,000 of cases) at this price point and we'll take it.

Now that's just the beginning. What money changes hands, and in what direction, is another question.
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WetThrust Moneycircus • an hour ago
This is certainly true. I bought a bottle of Valpolicella Amarone the other day from a major chain that had a very cheap cork on what was a £20 bottle of wine. I contacted the supplier as I thought it was counterfeit. But it turned out it was a special run. As you say, a cheaper product trading on the reputation of the regular product. I wonder who got to pocket the excess profit on what was really only a £7 bottle at best. UK supermarkets have a corrupt culture that would not be unrecognised in Africa.
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Alan Llandrindod Wells Moneycircus • 2 hours ago
All the big retailers use their oligopoly power to play this game. And worse.
I like your use of the term "benefits" sarcastically.

Wait for revelations at them all, including the so-called ethical ones.
They issue long questionaires saying suppliers must adhere to ethical guidelines then purchase regardless of ethics.
The Chinese use state employees to fill these forms in and wet themselves laughing.

Confiscation of so-called "marketing" or "promotion" money, which the supplier then has to try and retrieve ,if he has the guts, are standard. These can be steep when extra profit is required by the retailer to flatter the accounts and build "so-called" profits.
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Smells like a cover- up.

always presupposing that the overall market recovery continues at least for the time being, the following may help tesco sp ...... imo, only worth a quick trade as i really don't trust the markets for even the short term ....



A shortfall in half-year profits at Tesco which plunged Britain's biggest retailer into crisis is next week expected to be disclosed to have been smaller than initially feared.
Sky News understands that the supermarket chain plans to announce alongside its first-half results on Thursday that it had previously overstated earnings by between £200m and £250m.
The final figure was likely to be somewhere close to the middle of that range, a banking source said.

Still going to be an awful set of figures announced.

chairman Richard Broadbent - The axe has been sharpened.

He has been under pressure to resign for a month now. The Auditors for Tesco had given warnings of accounting methods for the commercial deals with suppliers months before the sh-t hit the fan.

In the papers: Tesco turnaround given £3bn price tag
By Proactive Investors
October 22 2014, 7:00am


The Times

Tesco turnaround given £3 bn price tag: A turnaround of Tesco will cost £3bn and is likely to take six years, according to a damning verdict from a top City bank, which urges the chain to slash prices, raise wages and force executives to fly in economy

Interim Results

· UK like-for-like sales down (4.6)%, impacted by strong competition across the grocery market, headwinds from price cuts and fewer untargeted promotions
· £0.9bn Group trading profit - year-on-year decline reflects challenges of UK business
· Total UK online sales up 11%; like-for-like sales growth of +0.8% in UK convenience stores
· Deloitte investigation into overstatement of expected half year profit concluded; impact confirmed as £(263)m, of which £(118)m relates to first half trading profit, with the balance treated as a one-off item (being c.£(70)m relating to 13/14 and c.£(75)m to pre-13/14)
· Interim dividend 1.16p*** as previously announced; full-year capex reduction to £2.1bn
· New Executive team in place and reviewing all strategic options to create greater shareholder value


* Group sales (inc. VAT) exclude the accounting impact of IFRIC 13 (Customer Loyalty Programmes).
** Underlying diluted EPS growth calculated on a constant tax rate basis; (48.2)% at actual tax rates.
*** The interim dividend will be paid on 19 December 2014 to shareholders on the Register of Members at the close of business on 31 October 2014.


Half Yearly report

Off 9%..

I get the impression that most of the real damage is done ( Hopes! ) but with a 6-year timescale ( for "recovery" whatever that means ) ...few will want to Buy stock hoping for a fast rebound.... It's still too high IMHO for that. But maybe if it nudges £1.49 that would invoke some trading-interest, but we can expect Dividends to be thin . . . unless there is a Snap BID.
Recently, heard something about a Merger with Sainsbury ( Not to TSCO ), so that might further sicken TSCO stock/Recovery.

dreamcatcher - 19 Oct 2014 21:09 - 1196 of 1201 edit this post

Still going to be an awful set of figures announced.

chairman Richard Broadbent - The axe has been sharpened.





Tesco chairman departs as profits tumble 92%

By Philip Whiterow

October 23 2014, 7:37am
Tesco said Deloitte’s report had now been passed to UK financial regulator, the Financial Conduct Authority.
Tesco said Deloitte’s report had now been passed to UK financial regulator, the Financial Conduct Authority.


Tesco’s (LON:TSCO) chairman stood down today as he expressed "profound regret" for the trading and accounting problems that saw profits tumble 92% in its latest half year.

The supermarket group stunned investors in September when it warned profits had been overstated by at least £250mln.

Sir Richard Broadbent said: "The issues that have come to light over recent weeks are a matter of profound regret" but added it had "acted quickly to clarify the financial performance of the company ".

An investigation by accountants Deloitte has found that the overstatement was in fact £263mln, of which £118mln related to this period and £145mln for prior years.

Tesco said Deloitte’s report had now been passed to UK financial regulator, the Financial Conduct Authority.

Because of the FCA inquiry the retailer could give no more information about how the accounting error came about, it said. Eight senior UK executives are currently suspended because of the investigation.

News on trading was hardly more encouraging as the group blamed strong competition across the grocery market, headwinds from price cuts and fewer untargeted promotions for a 4.5% drop in sales in the six months to 23 August to £30.5bn excluding VAT.

Trading profit was 41% lower at £937mln. After a raft of one-off charges including the accounting problems pre-tax profits dropped 92% to £112mln.

Dave Lewis, who took over as chief executive at the start of September, refused to give any forward guidance, adding he had started a review of all aspects of the group.

“Trading conditions are tough and our underlying profitability is under pressure. We do, however, face these challenges from a position of market strength,” he said.

“Three immediate priorities are clear: to recover our competitiveness in the UK, to protect and strengthen our balance sheet and to begin the long journey back to building trust and transparency into our business and brand."

Shares fell 5% to 173.9p.

There is also fear of a cash call.

It would be helpful to shareholders to see cash is being raised from another source; eg. From the sale of one of Tesco's businesses. Then I think we might then see the bottoming out.

I always enjoy reading the comments by FT writers in Alphaville blog:

Today on TSCO:

"TT
my view on retail in the UK is pretty simplistic
TT
The retailers were enjoying very high margins for so long
TT
gravity had to hit
TT
then the disruption by the discounters, easier planning laws for smalls tores and online competition acting as a catalysts for change
PM
Price has halved in the space of 12 months
TT
one retailer contact pointed out to me that
TT
in continental european countries, discounters have a market share of about 10 to 15 per cent
PM
is it that high?
TT
so they probably going to double market share in the UK over the next few years
TT
not so high..but higher than the uk
TT
and you have pricing pressure
TT
and cost pressure from running online operations
TT
you are going to have a very tough industry scenario for the next couple of years
PM
Yep
TT
still Tesco is really formidable…. nature abhors a vacumn..even an information vacumn
TT
it will come back…
PM
Hmm
PM
let’s move on"

I recently visited the UK after being away for a year. I immediately sold my UK supermarket shares when I saw how competitive the market had suddenly become and the deflation in food prices. The big four are just going to have to live with 20 to 40% lower margins and lower profits IMO.

Tesco may not survive, ie shareholders returns and of course far larger overheads per store then Aldi, Lidl etc. A lot of the stores are going to be huge white elephants, as what do they do with the floor space that returns the same profit as food ? There will be huge implications for the businesses supplying the likes of Tesco, Sainsbury with business falling. There has got to be mass labour lay offs in the near future.

"There will be huge implications for the businesses supplying the likes of Tesco, Sainsbury ..."

Indeed..as with Premier today .."The switch by UK shoppers to discounters has forced Mr Kipling and Sharwoods curry sauce maker Premier Foods to report lower sales and to warn that annual profits would be towards the bottom end of hopes...."


All good for the UK consumer though...just wish Aldi and Lidl would come to New Zealand and give these greedy Aussie Supermarkets here a kick up the backside...

A lot of Aldi's Food is uk sourced . A lot of the veg and baked goods are from the uk. Just wonder how Aldi's suppliers manage to grow with the huge demand. The suppliers surely must have locked in contracts, otherwise they would grow to service demand only to lose the contract in the future.

All good for the UK consumer though...just wish Aldi and Lidl would come to New Zealand and give these greedy Aussie Supermarkets here a kick up the backside...

How loyal are the New Zealand consumers to own brands and supermarkets ?
Tesco thought they would walk over the supermarkets in the states and look what's happened. No way were Americans going to stray from Walmart, Publix etc.

DC i lived in Florida and used to shop in Publix .
As you probably know the US chains usually occupy several states ,Publix was Florida Georgia / Alabama and maybe a couple of others . Walmart didn't sell any groceries until 1996 ,since then they have become the largest grocery seller in the country ,they are in every town/city ..
What made Tesco think they could waltz in to America and open supermarkets when Walmart was crushing the competition ?? ..

If you want to read an interesting book then read (The Walmart Effect) it won business book of the year when it was first published really interesting and the figures mind blowing ..