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).

Online/delivery - you have to ask why Aldi and the likes have avoided this service to date.
Tesco charge a delivery cost but nothing like the £20 true cost to deliver to your door.
There are pickers, to select your order, driver wages, chilled van costs/fuel. Vast overheads. Discount stores are growing turnover at twice the rate online shopping is growing. So you have to ask why are they still so keen to push online shopping. Great for the customer but for every store shopper that switches to home delivery, the store customer is picking up the overheads in their shopping purchases. Will Tesco ditch this service ? I just wonder if one supermarket does, will they all follow. Just as one supermarket delivered first and they all followed like sheep. Aldi clearly sees customers prefer to shop in a smaller store and for the huge cost saving are prepared to pick their own shopping up. I see home delivery being ditched especially if customer head counts still drop in stores as the overheads will be impossible to meet.

Tesco property time bomb
By Trader Talk
November 22 2014, 7:00am

Competition from fast-growing German discounters Lidl and Aldi have sparked a price war, chipping away at the market share of their bigger competitors. Market leader Tesco (Epic: TSCO) is bearing the brunt, with sales falling 3.7% in the period, while Lidl and Aldi added 16.8% and 25.5% respectively. Tesco’s overall market share is down to 28.7% from almost 30% 12 months ago.

It is also becoming harder to value these businesses, with the value of assets underpinning the shares falling, little clarity on future profitability and dividends being cut. Investors have often talked about the assets of the UK supermarkets supporting the valuation, with the value of Tesco property said to be worth £21 billion, over 30% more than the market capitalisation.

Yet there are growing concerns over the quality of those assets, with the gap between the performance of large out-of-town stores and convenience stores widening, undermining the value of these out-of-town warehouses. Sainsbury’s recently took a charge of £663 million related to its property portfolio, while some analysts argue that Tesco’s assets could be worth less than half the book value indicated on the balance sheet.

Tesco still trades on a relatively full 12x prospective earnings, although falling revenues, profits and a failure to issue full-year profit guidance makes it hard to value the business. Tesco’s interim results on 23rd October showed net profit fell to £6 million in the six months to 23rd August, compared with £820 million in the same period last year, while revenue dropped 4.5% to £30.47 billion.

The groups pension deficit ballooned by £800 million since February to £3.4 billion, squeezed by declining returns on corporate debt. Meanwhile, the interim dividend has already been slashed by 75% and management are expected to cut the final by a similar amount, leaving an annual yield of 2.5%.







The chart of Tesco illustrates the 18-month downtrend, with the 50-day moving average providing resistance to any spikes. After rallying 15% in the past month, the shares appear to have run out of steam, with the bearish divergence evident from the declining oscillators, indicating the underlying momentum is fading.

Tesco has fallen a long way, but with margins under pressure, assets vulnerable to write-downs and an ongoing investigation by the serious fraud office for fiddling its accounts, leaves Tesco susceptible to further weakness.

At the time of writing the share price is 194.0p and the downward momentum suggests trading short. Near term targets are seen at 186.25p, 177.5p and 167.8p, while a stop-loss above resistance at 201.75p could be used to minimise risk





http://www.proactiveinvestors.co.uk/columns/trader-talk/17361/tesco-property-time-bomb-17361.html

It had to come -



Tesco shareholders take legal action against food retailer

Tue, 25 November 2014



Price: 188.25

Chg: -5.15

Chg %: -2.66%

Date: 16:20

Tesco shareholders decided to take legal action against the food retailer after the troubled giant declared a £263m hole found in profits.
The action, conducted by Stewarts Law firm, will seek to establish that shareholders are entitled to compensation for losses caused by Tesco's alleged breaches of the Financial Services & Markets Act arising from overstating its earnings.

Litigation firm Bentham Europe will fund the shareholders action which is expected to proceed within the next six months.

Tesco is currently being investigated by the Serious Fraud Office (SFO) after overstating its profits by £263m last month.

The Stewarts Law said it will allege that directors and senior management "knew or were reckless as to whether Tesco's statements to the market were untrue or misleading and/or dishonestly concealed the true position".

John Walker, managing director of Bentham Europe, said: "Shareholders are justifiably concerned that Tesco has misrepresented its earnings resulting in material losses.

"We expect the legal claim to reveal the true extent of the problem and allow shareholders to seek compensation for harm suffered."

Sean Upson, partner at Stewarts Law, said: "We expect to issue proceedings against Tesco in the High Court in London within 6 months.

"We do not intend to wait for the outcome of the SFO investigation which may take some years."

Shares in Tesco were down 1.81% to 189.9p at 12:03 on Tuesday.

The point I was making ( FWIW ) is that the Big Supermarkets are not losing market-share as such to the discounters, The opening of Lidl in Bedfordshire will take away customers ( if only to see what's new in town), but that is a specific event and if the Lidl tills are poorly manned ( which is common ), and the range of stock somewhat limited ( as has been mentioned here ), I suspect the Tesco-lost customers in 3-month's time will be those who have little spending power - and therefore the Tesco (Bedford) TO will take far less of a knock, that many suggest.
As to closing stores;
this was a suggestion by a financier that was looking at the T/O woes. But does it make sense,? -for every store Tesco closes will directly affect T/O.
I suspect the solution is to play the car-park card - Lidl are introducing severe penalties for overstaying - and as a result I have reduced my spend there . . . since it's so much easier to visit Tesco and with the discounters counter-action, Tesco prices can be surprisingly similar - and THAT is where the Tesco T/O is falling - even if the customers remain loyal.

Another Poster suggested that an issue is the recent Financial Reporting which caught Tesco ( er, and their Auditors?, Ahem )...... that surely is a Major reason for the sp fall . . . since the expected profits were an illusion, weren't they?

BBC News 24 November 2014 Last updated at 00:14
By Bill Swale
Business reporter

The couple who helped transform the way we shop
Clive Humby and Edwina Dunn

The couple have been married for 32 years after first meeting when working in the same office.

As the owners of a small business with just 30 members of staff, Edwina Dunn and her husband Clive Humby shouldn't have been in Tesco's boardroom.

Yet back in 1994 they had been invited to give a presentation to Tesco's directors.

What Ms Dunn and Mr Humby said that day enabled the supermarket group to double its market share in little more than a year, transformed the way many of us shop, and ultimately made the couple multimillionaires.

After they had finished their presentation, an awkward silence followed for more than a minute.

“The thing to remember is that data was thrown away in those days... there was no such thing as data mining or data profiling, this was all new”
Edwina Dunn

This was eventually broken by Tesco's then chairman, Lord MacLaurin, who made a remark that has gone down in the supermarket's folklore: "What scares me about this is that you know more about my customers after three months than I know after 30 years."

So what was the secret of Ms Dunn and Mr Humby's presentation?

They had shown the Tesco board that their tiny business had the software and skills to do something the supermarket group hadn't been able to do for itself - work out almost exactly what Tesco's customers were buying.

Ms Dunn, now 56, says: "It was the defining moment."

Tesco quickly gave the couple a long-term contract and used their expertise to launch the Tesco Clubcard, the world's first supermarket loyalty card.

Division of labour
Ms Dunn and her husband had set up their business four years earlier, in the kitchen of their home in Chiswick, west London.

Tesco's Clubcard was an immediate success with shoppers
Called Dunnhumby, it was one of the first companies in the UK dedicated to analysing data to best work out the spending patterns of consumers.

Building on work the couple had previously done while both employed at the UK arm of a American software business (where they had first met and married after just one year), Ms Dunn and Mr Humby had a clear division of labour.

He was the software and data expert, and she was the chief executive who would look after the day-to-day running of the business.

Their first client was UK food wholesaler, Booker.

Basket full of groceries
Dunnhumby was able to let Tesco find out exactly what customers were buying
Studying Booker's sales in depth, they were able to advise the company on exactly what its customers were buying, allowing Booker to improve its distribution network.

“It had always been our intention to ultimately exit the business, and we had come to the end of business plan”
Edwina Dunn

Thinking about this these days, many might question why Booker wasn't already doing this itself. But back in 1990 no national retailer was properly collecting and analysing its sales data.

Retailers at the time obviously knew how much they were selling of a particular product, but the key point is that they did not know what combination of items consumers were typically buying. Dunnhumby was able to provide this information.

"The thing to remember is that data was thrown away in those days... there was no such thing as data mining or data profiling, this was all new," says Ms Dunn.

Selling data
In 1994 a senior manager at Tesco got in touch with Dunnhumby because the supermarket giant wanted to launch a loyalty card.

The Clubcard helped Tesco establish itself as the UK's largest supermarket group
The card would give customers special offers and money-off coupons, in return for Tesco finding out a lot more about what people were buying. Only the company was having difficulty dealing with all the data.

"They were struggling with their pilot, there was just so much data that they couldn't manage it," says Ms Dunn. "Remember that computers were not what they are today.

“They were happy, and we were happy. And we were tired actually... I just needed a rest”
Edwina Dunn

"So we were invited in to look at their data, and told not to get too excited, as it would only be one-off."

It was the start of a 16-year working relationship between Tesco and Ms Dunn and Mr Humby.

Thanks to Dunnhumby's help, Tesco was able to successfully pilot its Clubcard across nine stores in 1994, and then launch it nationwide a year later.

Ms Dunn explains how Dunnhumby was able to make the data work: "We brought in a statistician's mindset, which was 'some of the data, some of the time'. That is what the technology people at the time didn't grasp."

So she says that while Tesco had been trying to analyse 100% of consumer data, a giant task that was near impossible at the time and very expensive, Dunnhumby was able to show that they could instead just study a 10% sample and still achieve between 95% and 99% accuracy.

Ms Dunn says she and her husband have clearly defined roles so as not to overlap
"When Tesco asked its IT department how long, and how much to do the [nationwide] roll out, they said three years and £50m," says Ms Dunn.

"We said £250,000 and 10 weeks."

The launch of the Clubcard was an immediate hit with Tesco's customers, with millions of people signing up, tempted by the promise of money-off coupons, and special offers that the supermarket group had arranged with the big brand owners, such as Coca-Cola and Nestle.

In just over a year it enabled Tesco to overtake Sainsbury's and become the UK's largest retailer.

But how exactly did Dunnhumby make millions of pounds from its contract with Tesco?

Firstly Tesco paid it an annual fee, but more importantly - and much more lucratively - Dunnhumby got a share of the money Tesco started to receive from selling to the likes of Coca-Cola the vast amount of consumer data it was now collecting.

Exit plan
Ms Dunn describes the start of the working relationship with Tesco as an "amazingly intense phase".

Dunnhumby's workforce "immediately" went from 30 to 70, and then continued to more than double every year.

"That was the fastest we could grow, it was our maximum capacity, as we couldn't hire and train enough people," she says.

Ms Dunn and her husband are now studying celebrities such as Rihanna on social media

With Tesco's blessing, Dunnhumby was soon signing similar deals with supermarket groups around the world, and then in 2002, Tesco bought a 53% stake in the business.

In 2010, Ms Dunn and Mr Humby eventually sold the remainder of the business to Tesco, pocketing a widely reported £93m in total.

Ms Dunn says: "It had always been our intention to ultimately exit the business, and we had come to the end of business plan. We had exceeded our numbers, and Tesco gave us more than they had promised.

"They were happy, and we were happy. And we were tired actually... I just needed a rest."

Yet after six months of relaxation in the Caribbean and Mediterranean, Mr Humby and Ms Dunn were keen to start working again.

And so a year ago, they joined a start-up business called Starcount, which aims to study which celebrities people follow on social media, and then sell on the useful information.

"Brands need to know what [and who] people really love. Only then can they introduce their brands in a way which feels relevant and personal."

Ms Dunn happily admits that Starcount is yet to make money, but earlier this year she helped it to secure multi-million pound investment.

And while she doesn't comment on Tesco's recent woes - the supermarket group revealed in September that it had overstated its profit guidance - Ms Dunn says she hopes it will continue to be committed to its Clubcard.

Well, there's some good news for Tesco!

http://www.telegraph.co.uk/news/shopping-and-consumer-news/11257553/Asda-exposed-as-supermarket-with-dirtiest-chicken.html

Former Tesco boss Sir Terry Leahy defends his tenure insisting it had not grown 'too big' and he is shocked at its downfall


http://www.dailymail.co.uk/money/markets/article-2850702/Former-Tesco-boss-Sir-Terry-Leahy-defends-tenure-grocer-insisting-not-grown-big-helm.html

Week ahead: Tesco, Betfair, Chancellor’s statement
By Andrew Neil
November 30 2014, 7:00am
Week ahead: Tesco, Betfair, Chancellor’s statement


The first week of December is packed full with company announcements, central bank meetings, major economic data releases including the US non-farm payrolls and, in the UK, the Chancellor’s Autumn Statement on Wednesday.

Tesco (LON:TSCO) supermarkets bore the brunt of Black Friday chaos as shoppers clashed over bargains.

Things should be a lot calmer when the UK grocer puts out a trading statement on Wednesday.

Even so, the business is still battling an accounting scandal and a severe slowdown in sales at home.

With new chief executive Dave Lewis on board, plans to restore reputation and deleverage the balance sheet are underway.

Could now be the right time to buy Tesco? Not according to JP Morgan Cazenove, which has reiterated its ‘underweight’ stance on the stock.

The broker has a target price of 145p, with shares currently trading around 180p.

My wife tells me, that Philip Schofield revealed on 'Loose Women' today, how he and his wife nearly called their new baby girl,"Tess".

And then they realised..............

How she could have easily then been called, "Tesco Field".

Suspended Tesco executive to return as Dave Lewis overhauls team

Supermarket's new chief executive to take direct control of Tesco in the UK while four of suspended executives leave





Tesco boss Dave Lewis takes charge of struggling UK business

Tesco suspended eight executives after discovering a blackhole in its account Photo: PA


By Graham Ruddick

5:11PM GMT 01 Dec 2014



One of the eight Tesco executives suspended after the discovery of a black hole in the company's accounts is to return to the retailer.


Matt Simister will return as food sourcing director after Dave Lewis, chief executive, said Tesco's investigations found that Mr Simister had actually "worked tirelessly to resolve the issues we faced".


The return of Mr Simister, confirmed in an email to staff, was revealed as Mr Lewis announced a shake-up of the senior team, including putting himself in charge of the UK business.


However, while Mr Simister will return, four of the suspended executives will leave Tesco.


It is understood that Chris Bush, the former managing director of Tesco, Kevin Grace, the former commercial director, Carl Rogberg, the ex-UK finance director, and John Scouler, the UK food commercial director, have left Tesco.


The company confirmed that four of the executives had left Tesco after a "clear and impartial process", but declined to say which. It is understood that Dan Jago, William Linnane, and Sean McCurley remain suspended.

Mr Lewis has put himself directly in charge of the company's struggling UK business as he attempts to reverse a fall in sales.

The other changes include Jason Tarry, previously the boss of clothing arm F&F, becoming head of commercial for the UK and the group.

Other changes include Robin Terrell, who has been running the UK business in the absence of Mr Bush, becoming head of customer while Jill Easterbrook, the chief customer officer, will lead a business transformation programme. Benny Higgins, who runs Tesco Bank, will also take on responsibility for group strategy.

As a result of the changes, Tesco said that two roles will no longer be needed. These are Matt Atkinson's position as chief creative officer and David Hobbs' as group business planning and strategy director.

The changes will take effect from January 1, after the key Christmas period.

In the email confirming the return of Mr Simister, Mr Lewis said: "I am delighted to announce that Matt Simister will return to his role as group food sourcing director.

"We asked Matt to step aside to facilitate our recent investigation into commercial income recognition.

"During our work it became clear that Matt, in fact, worked tirelessly to resolve the issues we faced. Matt is one of our most capable leaders, and I am confident his leadership will support our agenda in commercial going forward.

"Finally, Matt's conduct and contribution during our investigation was exemplary and I'd like to personally thank him for that."

Trading Update

In recent weeks we have implemented new policies and procedures which will govern our commercial income activities and taken actions to invest in and improve our customer offer.

In our interim results on 23 October we highlighted that full year profitability would be impacted by actions we may choose to take and that the commercial income overstatement would affect second half results as we revisited our plans with the new management team

Our new Commercial approach will underpin stronger long-term relationships with our suppliers, benefiting customers, whilst at the same time ensuring that revenue recognition is transparent and appropriate. We have retrained our entire team and begun the cascade with our suppliers.

In addition, we have invested further in service, with more than 6,000 new colleagues in store, increased product availability on key lines and invested in price - all aimed at enhancing our customer offer. The early feedback from customers is encouraging.

On the 8th January we will share more detail about the measures we plan to take to improve the competitiveness of the UK customer offer and to strengthen the balance sheet. On the basis of the changes and investments made to date we now anticipate group trading profit for the financial year ending February 2015 will not exceed £1.4billion.


Dave Lewis, CEO said:

"Tesco is focused, and will continue to focus, on doing the right thing for customers. This means running our business in a way that everything we do creates sustainable value. Whilst the steps we are taking to achieve this are impacting short-term profitability, they are essential to restoring the health of our business. We will not engage in short term actions that compromise in any way our offer for customers.

We still have much to do but are making good progress in developing our plans to improve the long-term positioning of the Group and I will share more of that on the 8th January. Our priorities remain restoring competitiveness in the UK, protecting and strengthening the balance sheet and rebuilding trust and transparency. For now, all the Tesco team is focused on delivering the best Christmas for customers."

Interesting that MRW is also in auction!

DailyMail





SIMON WATKINS: Prepare for revolution in the aisles as Tesco scraps supplier fees

By Simon Watkins for the Daily Mail

Published: 22:03, 13 December 2014 | Updated: 22:03, 13 December 2014



Tesco's rivals would be forgiven for having enjoyed a moment of schadenfreude when the group was forced to admit a huge £260million error in its profits. But it looks like that blow to Tesco could now end up spreading to the supermarket sector as a whole.

Drastic Dave, as Tesco’s new chief executive Dave Lewis is known, could be about to shake up the sector more significantly than anyone could have guessed. Scrapping the system of hidden fees and charges on suppliers that lay at the root of the profit error, is a dramatic move and one that could force others to follow suit.

Two months ago The Mail on Sunday reported how Britain’s supermarkets derived as much as one third of their profits from these fees, which involve charging suppliers for everything from late delivery to flat fees just to get their products on the she

+2

Overhaul: Tesco’s new chief executive Dave Lewis could be about to shake up the sector more significantly than anyone could have guessed

Abandoning this system will amount to a revolution in the way supermarkets work. It will involve huge initial costs – Tesco itself is expected to make a loss in Britain next year as a result. It would costs rivals heavily as well.

Dave’s gamble is that a similar model in which supermarkets buy goods from suppliers, add a few pence for profit and then put them on the shelves will be more sustainable and indeed fairer. It is, of course, what most of us thought was going on already.





More...
• Supermarkets reeling as Tesco scraps supplier fees: Shift in strategy to price-cutting forces rethink among key rivals
• TESCO SHARES: Check the latest price here

The model of a complex range of fees imposed on suppliers – know euphemistically in the business as ‘back margin’ – has emerged as the dirty secret of the whole retail supply chain. The scandal of Premier Foods’ demand for fees for suppliers, also first reported in The Mail on Sunday last year, is another example.

Tesco’s move to abandon this model altogether is courageous. It is not without risks: it will require widespread renegotiation of terms with suppliers not all of which will necessarily go Tesco’s way. But if rivals do find they have to follow suit, then Dave will have managed to turn an accounting disaster into a positive by giving Tesco the advantage for being first mover in a supermarket revolution.

There may, however, be losers among smaller suppliers. These are often the companies that have been asked to pay one of the fees to get on supermarket shelves. Without those kinds of fees, will Tesco be able to justify stocking those products?

Supermarkets in the future may have to stock a narrower range of products in order to be able to offer the prices that customers are willing to pay.

Supermarketing is now in the midst of a major revolution in its business model. It is going to be painful for the companies and their shareholders. But I think there is every chance it will mean better value for shoppers

Tesco's accounts black hole may be bigger than thought, suggests JP Morgan


http://www.proactiveinvestors.co.uk/companies/news/75513/tescos-accounts-black-hole-may-be-bigger-than-thought-suggests-jp-morgan-75513.html

Sharecast - Tesco's suppliers to be involved in SFO investigation

Sun, 21 December 2014


Some of Tesco's suppliers are to be involved in the Serious Fraud Office's investigation over the stricken retail giant's accounting practices.
The likes of Unilever and Diaegeo are set to be dragged into the investigation, with the SFO expected to interview staff of Tesco's providers as well as examine the documentation associated with the supermarket's supplier agreements.

According to the Sunday Telegraph, the latest development in the SFO's investigation on Tesco will be implemented in 2015 and underlines the size of the scandal involving one of Britain's biggest retailers, which reported a £263m black hole in profits earlier this year.

The deficit was linked to the group's commercial income, which is made up of payments and rebates from suppliers, and after conducting an internal investigation the retailer is understood to believe that a "small group" of people within the company deliberately misled its auditors and accountants to inflate its financial results.

Four Tesco executives have already left the retailer in the wake of the scandal.

Tesco's auditor under investigation by industry watchdog

By John Harrington

December 22 2014, 12:08pm
Tesco’s auditor, PwC, said it would co-operate fully with the FRC’s investigation
Tesco’s auditor, PwC, said it would co-operate fully with the FRC’s investigation


Tesco (LON:TSCO) is facing more turmoil after the Financial Reporting Council (FRC) launched an enquiry into the supermarket giant’s accounts.

Accountancy watchdog FRC is focusing on accounts for the years 2012, 2013 and 2014, following revelations earlier this year by the company’s new chief executive that it had misled the market by overstating profits.

In preparing its interim results, the group became aware that guidance issued in a pre-close statement in respect of its half-year profits had been too high by more than £250mln, due to the accelerated recognition of commercial income and delayed accrual of costs.

Tesco’s auditor, PwC, said it would co-operate fully with the FRC’s investigation. Tesco, meanwhile, said it would provide support for the enquiry.

i wonder what the underlying value of tesco's property bank is, for i assume many of their sites are freehold

if the shops then turn in a profit of whatever it is - £1bn+ even now from memory - you then take your pick on whether to buy or to short, both having respectable cases if, like me, you think there are yet more skeletons to be revealed

Tesco has done a lot of sale and leasebacks, so I suspect that a lot of its portfolio is leasehold (at market rents) rather than freehold.

My concerns - The out of town stores are fast losing value . Sainsbury took a £663 million hit on its property portfolio. Also very concerning
the groups pension deficit ballooned by £800 million since February to £4.2 billion.

Tesco are sitting on about £15.9bn of operating lease commitments. This is fine as long as the store stays profitable. The property hit for Tesco could be HUGE. Should be declared in the April Finals.