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).

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 ..

Shopped in them many times in Florida Jimmy. When I first saw one of their sign written goods vehicals glance by, I thought I read something else. lol . Cheers Jimmy. The man/woman who can come up with an idea to save Tesco is going to be a wealthy individual. Think . :-)) Erh not much springs to mind.

Published on 22 Oct 2014

CEO Dave Lewis speaks to Jody Hodges, Group Project Planning Director at Tesco about the company's 2014/15 Interim Results.

Tesco withholds £2m pay-out to former bosses
Tesco suspends payments to Philip Clarke and Laurie McIlwee as accounting scandal sparks 92pc fall in profits
Telegraph.co.uk
By Graham Ruddick, Retail Editor
10:35PM BST 23 Oct 2014

From: http://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11183871/Tesco-withholds-2m-pay-out-to-former-bosses.html

Tesco is withholding payouts totalling £2m to Philip Clarke and Laurie McIlwee, its former chief executive and chief financial officer, as Britain’s biggest retailer reels from the discovery of a £263m shortfall in its profits.
The company revealed that it was suspending payments due to Mr Clarke and Mr McIlwee as it reported a 92pc fall in pre-tax profits following the accounting scandal and slide in UK sales.
Sir Richard Broadbent, chairman of Tesco, said he would step down as result of the crisis. Sir Richard insisted he was “not being pushed to go” but wanted to “draw a line” under the scandal. He is expected to leave the company next year.
“On behalf of the board, to demonstrate to the world that principles exist, I choose to go,” he said. “You can’t really say that nobody’s carrying the can.”
Shares in Tesco fell 12, or 6pc, to 171p on the back of the results. More than £1.1bn was wipe off the value of food retailers, with shares in J Sainsbury and Wm Morrisons also declining.
...............
Related Articles (linked from this Telegraph link)
Tesco: it's worse than we thought 23 Oct 2014
Dave Lewis's three priorities for saving Tesco 23 Oct 2014
Markets Webchat: Tesco shares slide 23 Oct 2014
Tesco crisis: everything you need to know 23 Oct 2014
Tesco could float £10bn Asian business 22 Oct 2014
Five reasons not to buy Tesco shares 22 Oct 2014
..................
Clive Black, analyst at Shore Capital, said: “We can never recall a period so damaging to the reputation of the company.”
Tesco has been rocked by the biggest crisis in its history after a whistleblower alerted new chief executive Dave Lewis to a black hole in the company’s profits.
Tesco said that accounting firm Deloitte had completed an investigation into the scandal, with the findings now in the hands of the Financial Conduct Authority, the City regulator.
The company declined to comment on the causes of the black hole, saying it will leave the FCA to establish where the responsibility lies.
Tesco has already suspended eight executives, including UK boss Chris Bush, as part of the investigation and revealed yesterday that it will also withhold payments to its former management team.
Mr Clarke, who was in charge for the period under scrutiny and stepped down as chief executive at the end of August, is still being paid his full £1.1m salary. However, he was in line to receive a further 12-months pay in a lump sum in January as part of his exit agreement. This will now be withheld, as will a similar £880,000 payment which was due to be made to Mr McIlwee, who left Tesco in April, within weeks.
Mr Lewis said Tesco was “withholding” the payments until the FCA’s investigation is complete. Referring to Mr Clarke, he said: “I don’t know what he did or didn’t see. That is a matter for the FCA.”
Mr Lewis he planned to get Tesco back on track by returning the retailer to its roots. He has already added 2m more staff hours to the company’s stores and also wants to improve availability. Once these improvements are in place, Mr Lewis added, then he will “consider” price cuts.
The new Tesco boss also confirmed that the company will consider selling off assets in order to improve its financial headroom in the wake of the fall in profits. However, he played down the prospect of a rights
Mr Lewis said: “The first port of call is that we think there is much more we can do to release value. We will go there and extract value first. We are not currently working on a rights issue.”
Tesco reported that pre-tax profits fell by 92pc to £112m for the 26 weeks to August 23. This included a 4.6pc fall in like-for-like sales and a 56pc fall in trading profits in the UK.

Dc i could have helped Tesco when they sat round the boardroom table a few years ago and decided lets go in to the USA ,i would have said are you mad ! ,it cost them a billion pounds .
They could have given me 50 mil for my advice ,job done . Saved themselves a fortune . I'm available for hire and advice if any big companies are reading this ..
I mean to say i always get the FTSE somewhere near most months !!!..

Lol :-))

it never ceases to amaze me how many retailers think they can expand all over the world, and are then staggered and bewildered when they find they've got it all wrong, having failed to account for the different cultures and tastes