Tesco

[Gardian]

For anybody who hasn't heard the news, Tesco is in turmoil over what appears to be a major mis-accounting scandal. The half year profit forecast has been overstated by £250m vs the forecast of £1.1bn, so 30% or more.  Four senior executives have been suspended pending investigations.

The share price had dived on the publication of that original and apparently overstated £1.1bn number (which was below expectations) and of course it has now fallen off the end of the proverbial cliff.

I've read a bit about what may have been happening, but that is purely speculation. What Tesco has admitted to is the inclusion of income in the accounts for a period prior to when it actually related to.  But £250m???!!!

Now I'm not an Accountant, but even I know that that sounds dodgy.  I'll bet that things are hot in Cheshunt (Tesco's HQ) just now.  Oh ........ and where are the auditors in all this?  

n.b. For any nervous mods, I've pretty much confined the words in this thread to information published by the company itself. 

[idun]

I was a bank clerk and then an accounts clerk, but really, we had to have things right to the penny, so how can this happen.

As they say, IF you look after the pennies the £'s look after themselves.

Maybe they thought that they were simply playing monopoly and it wasn't 'real' money......... whosoever did this should be eyeing up their local JobCentrePlus. I really do not know how this was allowed to happen. There again I watched a program about Bernie Madoff a few weeks ago and the whole thing was beyond belief and should only have been beyond belief, and yet it happened.

[woolybanana]

Well, Tesco has been in a state of panic for some time; sales down, shares down, path forward uncertain. Time that there was a clear out of senior and middle management. I dumped the shares a while ago and am glad I did. Maybe they are worth a punt now, though.

[Gardian]

Hmmm WB. Good move.

I wonder whether anybody else dumped their shares quite recently ........... know what I mean?

[woolybanana]

Perhaps, but they would be in the majority, I reckon. Pundits say leave them for a while, so I shall. Too heavily tied up elsewhere anyway.

[woolybanana]

111,000,000 million shares traded including some late trades of £3,000,000 and £26,000,000, so there are some chancers out there somewhere.

[PaulT]

and the Public Sector looks to the Private Sector as examples of excellence

[Alan Zoff]

Reminds me of the Queens Moat Houses mess. Pressure on the directors and accountants to keep the share price up when they weren't actually generating more income meant that the only way things could look better was to find valuers who would inflate the value of the properties for the balance sheet. Eventually, the discrepancy stood out like a sore thumb and the share price collapsed.

But Tesco still generates a lot of income. I'm getting tempted.

[JSKS]

[quote user="Alan Zoff"]

But Tesco still generates a lot of income. [/quote]

Not for shareholders. Not since the last results where the dividend was slashed. This is a company with serious trading, financial and structural difficulties.

Put your money on the 3.30 at Catterick!

(Feeling smug having offloaded just shy of 10,000 shares a year ago)

[JSKS]

Can anyone tell me how to avoid all the ancillary gubbins in the post above when using the ''quote'' button. I just add my text after the quoted text but I get all the BLOCKQUOTE etc stuff.

[YCCMB]

This software (although it is better than er...shall we say...elsewhere....is a bit bizarre. If you're on an ipad, using Chrome, or Vanus is rising in Mercury, then you'll get all sorts of c**p appearing when you pist. We've been begging for someone to fix it for years, but be careful what you wish for...

[Alan Zoff]

2 years ago Tesco's sales were not much different to now, but the share price was double what it is now. The market place is different due to Aldi, Lidl etc but Tesco has a strong brand and pretty full car parks. No guarantees of course but all this pessimism could produce a good buying opportunity if the people at the top can sort it out.

http://www.tescoplc.com/index.asp?pageid=36

I never had much faith in the horses. Too many dodgy trainers and jockeys....

[JSKS]

[quote user="You can call me Betty"]This software (although it is better than er...shall we say...elsewhere....is a bit bizarre. If you're on an ipad, using Chrome, or Vanus is rising in Mercury, then you'll get all sorts of c**p appearing when you pist. We've been begging for someone to fix it for years, but be careful what you wish for...[/quote]

Thanks. I use a Chromebook therefore, necessarily, the Chrome browser. I guess I'll just have to assault you with the extras.

[Thibault]

There was an excellent article in the business section of The Times yesterday by Ian King in which he looked at the reputation of Aldi and Lidl. One of the things he mentioned which people might find surprising is to do with the horse meat scandal.

Most people assume that one of the the main culprits was Tesco. But in fact, some of Aldi's products were 100% horse meat, whereas the Tesco products affected were much lower. However the damage to Tesco's reputation has been much greater.

He also looked at reasons for the cheapness of products at Aldi and Lidl. It's worth quoting a bit from his article:

"Competiters, stung by the loss of market share to the pair...have their suspicions about how the pair achieve what appears to be such fantastic value. One of the more printable is a tactic of claiming to stock champagne at knockdown prices: the champagne is, indeed, available, but only at a handful of stores. Customers are attracted to the stores by such offers, only to be told that the champagne has sold out, even though it probably never there in the first place."

Later King says, "Equally curious, when the likes of Amazon, Google and Starbucks have been lambasted over the relatively small amount of tax they pay in the UK is the way Aldi and Lidl have attracted relatively little opprobrium for a shocking lack of transparency over the taxes they pay."

Undoubtedly Tesco in particular has suffered from the advance in the market by stores like Aldi and Lidl, as well as their own structural difficulties, but I wonder how long it will take before Aldi and Lidl lose their almost 'perfect' reputation among customers and we see another competitor stealing market share.

[Pierre ZFP]

[quote user="You can call me Betty"] ......... you'll get all sorts of c**p appearing when you pist.....[/quote]

Wise words indeed Betty  [B]

[idun]

I find it a rum old thing as to where people shop.  We visited Denmark years ago and all the supermarkets were very expensive and then we found an Aldi and it was a lot cheaper and nearly empty, in spite of it's central location in the town we found it in.

I am not an Aldi shopper. I went there with a friend last night as she wanted to go. As usual I bought a few bits and pieces, but not a big shop. Just would rather be 'not there'.

I sometimes shop in Lidl, buy a few bits, but never the less never have a big shop there either.

Have had poor service in my local Tesco.  And for all I am for basic supermarket products, don't like the wrappings on theirs, no idea why, just looks like it is say, "you want 'cheap' pet, well lookey here, you look like you're buying 'cheap'". I like a bargain and I do like to pay as little as possible but feel like I am getting good 'quality price'.

I have spoken to the Manager at my local Tesco several times when I have had problems, and I may as well have not bothered.

Morrisons is OK, I shop there about once a month, not a big shop, but a few things that I often cannot get elsewhere.

Most of my shopping is done at Asda and at local shops.

[JSKS]

I like Tesco.

It keeps the riff-raff out of Waitrose.

[idun]

[quote user="JSKS"]I like Tesco.

It keeps the riff-raff out of Waitrose.[/quote]

Only riff raff round here, no Waitrose in 50 miles[Www]

[JSKS]

Tesco shares now 193p and the market is full of price specified sell orders above that. Seems nobody is much interested in buying right now and even Warren Buffet has taken a hammering.

The problems are manifold:

Loss of market share in the last quarter makes Tesco the supermarket that has lost the greatest market shareover that period.

Suppliers contracts under question.

Possible need for rights issue to raise capital

And other problems already expressed.

It's not even out of the question, as it would have been a year ago, that Tesco could be a takeover target.

Remember big, high turnover compaies are not immortal. Think Pan Am, TWA, IBM, Polly Peck, Woolworth etc.

You'd have to be extraordinarliy brave to have a wager on Tesco now, surely?

[richard51]

As well as management greed (incompetence at best), I would like to think that the BDS movement made a little contribution

Just one link:

http://www.timesofisrael.com/bds-stickers-placed-on-israeli-products-in-ireland/

[Clark Kent II]

I suspect that Tesco's main problem is simply that Terry Leahy is no longer at the helm, and that the people now running it are just corporate jobsworths and not retailers. They can all read balance sheets and recite managerial bovine effluent but do not realise retail is one area where you have to understand your customer.

I don't really see Tesco as a takeover target - yet. It would require an enormous amount of leverage. If you are looking for a High Street takeover target, I would cast my gaze towards Marks & Spencer, that's a company that has really lost its way!

[idun]

When I left for France, I would look forward to shopping in M&S, Boots and WH Smiths when I was on holiday. And for years I used to spend a lot in these shops when I came back. But being away for so long, the changes which would have appeared gradual and maybe hardly noticeable to residents, appeared radical to me, and meant that I simply changed my shopping habits. Especially M&S. I rarely shop in M&S, even less so in Boots and Smiths, well, I don't.

When changes for the worse come gradually, I suppose that customers gradually start going elsewhere, it is just when one is 'away' it looks rather different.

Even when I moved back there were not so many Tescos around here, but they took over other supermarkets and there are quite a few  Tescos including Hyper markets now. They still don't get me as any sort of regular shopper.

I have no idea who could take over Tescos, there are too many of them around here now, but that is just my opinion, we'll see if we lose some in the near future.

[powerdesal]

We like TESCo, we also like Sainsburies, and Morrisons,don't much care for ASDA but that's probably because of the local clientele.

More people need to shop at Tescos, get the profits back up and hence the share price and thus the dividend ( we have a lot of Tesco shares ).

[Clark Kent II]

[quote user="powerdesal"] More people need to shop at Tescos, get the profits back up and hence the share price and thus the dividend ( we have a lot of Tesco shares ).[/quote]

I'll do what I can - but I shall want a share of your profits ...

I use Tesco quite a lot - I was there earlier this afternoon. All I can say is that of the supermarkets in my small town, it's head and shoulders above the rest. It is - easily - the most spacious and most pleasant place to ship. The staff are friendly and helpful, the range and quality of food appears to be very good.

In comparison, Morrisons is cramped and quirky and both Lidl and Aldi give the feeling of being in the third world. I don't use the Co-op. There is an M&S food store, where, no doubt, elevated prices for identical products fool people into thinking that they are getting elevated quality. We haven't got a Waitrose - yet ....

 

[JSKS]

I'm not sure that the shopping experience in store is as relevant as the trading conditions, contracts, rents etc that have a huge impact on the bottom line. While attracting customers or, more particularly, attracting their spending, is a sine qua non of retail it must be balanced by such spending giving rise to profit.

Sadly, Tesco has not only lost market share at a greater rate than its competitiors, it has done so a ta time when its strategy has proved flawed, there are serious question marks over its accounting practices and its cash reserves are pitiable. Furthermore, where Tesco was at one time seen as a safe debtor by those from whom it rented properties and land, suppliers etc, these creditors will now be less inclined to trust the viability of their future arrangements. I feel this is an under-appreciated factor which could adversely affect future contracts and further depress profitability.

Even at what seems like a bargain 194p at today's close there still seems to be more downside than upside particularly as Tesco can no longer be considered an income stock.

By any reckoning the correction in market value is a reflection of the decline of the company.