Every little helps

Cute Hoor · 23-10-2014 09:51AM

Tesco (Xetra: 852647 - news) chairman Sir Richard Broadbent is to quit as an inquiry into its accounting practices reveals a £263m profit overstatement, resulting in a 92% fall in first-half profits.

The supermarket chain said an internal investigation by Deloitte into its procedures had found historic failures in its UK food business.

It had suggested in September that the error was a one-off but said today the overstatement figure reflected previous reporting periods too.

Its share price fell 7% when the FTSE 100 opened for business in the wake of the statement.

Eight senior executives had been suspended pending the outcome of the inquiry, which examined how Tesco logged suppliers' rebates and if they were reported in the correct accounting period.

Tesco said there was no evidence anyone at Tesco had sought to gain personally but the findings raise questions about the leadership of former chief executive Philip Clarke, who stepped down in the summer before the accounting issues were made public.

Tesco said his pay-off - and that of former finance chief Laurie McIlwee - was being delayed until such time as inquiries were complete.

Sir Richard said his decision to stand down reflected "the important principle of accountability."

The business, which has been battling hard discounters and strong competition from other major chains, made the announcements as it confirmed the effect on its current half-year results.

Pre-tax profits fell 92% to £112m while UK trading profit was down 55.9% to £499m.

UK like-for-like sales were 4.6% lower - slightly better than expected.
Chief executive Dave Lewis said: "We know that we have got a lot of work to do.

"We know what it is we need to do to turn the business around ".
Tesco's share price has plunged more than 50% in the past 12 months as its dominance in the UK's grocery sector was eaten away by rivals.

It had previously admitted taking its eye off the ball while hunting growth overseas though its big investment in America fell flat.

The results statement said: "We have three immediate priorities. The first is restoring competitiveness in our core UK business.

The second is protecting and strengthening our balance sheet. The third is to begin the long journey of rebuilding trust and transparency in the business and the brand."

Johnny Jukebox · 23-10-2014 10:43AM

Anyone want to try and call the bottom on this :-) ?

gordongekko · 23-10-2014 11:14AM

Johnny Jukebox wrote: »

Anyone want to try and call the bottom on this :-) ?

Below 1.30

jank · 23-10-2014 02:01PM

When the bottom is reached there will be a massive reversal. If you could time it right it could be a nice earner.

arrowloopboy · 23-10-2014 07:19PM

gordongekko wrote: »

Below 1.30

You should be shorting it so;).

gordongekko · 23-10-2014 08:10PM

arrowloopboy wrote: »

You should be shorting it so;).

Not this time . I'm sitting it out as there's a fair amount of cash floating around the markets so there's a chance the vulture funds will pounce.

euroboom13 · 14-11-2014 09:40AM

£1.97

Bit of a bounce .

gordongekko · 14-11-2014 05:58PM

euroboom13 wrote: »

£1.97

Bit of a bounce .

It got upgraded during the week. The logic being that all the bad news is out there now.

Sonnenblumen · 16-11-2014 03:07PM

It's on a long road to recovery, and every little will help. Patience will be a virtue with this SP, but I'm in it for the longer term.

tralalala · 16-11-2014 04:37PM

why should it recover? the underlying business has to recover to guarantee an increase of the share price. Any signs of the business improving and the competitive landscape becoming favourable for Tesco? looks like a trap and it is not necessarily cheap. Retail is a bad business.

of course it could happen with speculation but not guaranteed.

jank · 09-12-2014 12:16PM

More profit warnings from Tesco. It was touching 155p for a few minutes.

http://www.iii.co.uk/articles/210777/tesco-plc-profits-collapse-recovery-plan-kicks

Id say there is a long road to recovery and the issues seem more systemic than previously thought. It is still a big risk, even at these prices.

Cute Hoor · 09-12-2014 03:37PM

The fourth profit warning in 5 months, hard to see where the good news is going to come from, might be short term trading opportunities in this but hard to see it getting back to former glories anytime soon, reached a 14 year low today

lucky john · 09-12-2014 04:19PM

I have been watching tsco for the last while. My conclusion is that as a buy and hold investment it is just way to dangerous even at £1.55. Drops of 10% or 15 % over one day are too common. I'm not sure where the safe entry price is. The bad news just keeps coming and the march of the discounters continues. Also the fact that buffet gave in rather than average down is a worry. If he thought there was any chance of a recovery even in 20 years he wouldn't have sold.

For you guys that trade short term it has to be a share that keeps giving though.

gordongekko · 09-12-2014 04:29PM

lucky john wrote: »

I'm not sure where the safe entry price is

gordongekko wrote: »

Below 1.30

^^^^^

lucky john · 09-12-2014 04:42PM

I have been watching tsco for the last while. My conclusion is that as a buy and hold investment it is just way to dangerous even at £1.55. Drops of 10% or 15 % over one day are too common. I'm not sure where the safe entry price is. The bad news just keeps coming and the march of the discounters continues. Also the fact that buffet gave in rather than average down is a worry. If he thought there was any chance of a recovery even in 20 years he wouldn't have sold.

For you guys that trade short term it has to be a share that keeps giving though.

Sonnenblumen · 08-01-2015 07:00PM

Today the biggest just got a little better and the fight back begins.

£2.10 + 15% today which probably scorched a few shorters.

Sonnenblumen · 24-01-2015 09:34PM

lucky john wrote: »

I have been watching tsco for the last while. My conclusion is that as a buy and hold investment it is just way to dangerous even at £1.55. Drops of 10% or 15 % over one day are too common. I'm not sure where the safe entry price is. The bad news just keeps coming and the march of the discounters continues. Also the fact that buffet gave in rather than average down is a worry. If he thought there was any chance of a recovery even in 20 years he wouldn't have sold.

For you guys that trade short term it has to be a share that keeps giving though.

I agree it is a share that keeps on giving but hardly for shorties?

lucky john · 18-04-2015 01:44PM

FT reports that tesco will post a 5billion loss on Wednesday next. Speculating that a possible rights issue may be need to fill a sizable hole in their balance sheet.

Sonnenblumen · 18-04-2015 08:56PM

lucky john wrote: »

FT reports that tesco will post a 5billion loss on Wednesday next. Speculating that a possible rights issue may be need to fill a sizable hole in their balance sheet.

Yes I've read some similar reportings, hard to know for sure, I think there's a hint of negative speculation in the media. But either way, I do not foresee any major upset if a RI is called? Pity about the divi. The company is making a strong recovery and this is evident in the SP.

Tugboats · 19-04-2015 03:28PM

lucky john wrote: »

FT reports that tesco will post a 5billion loss on Wednesday next. Speculating that a possible rights issue may be need to fill a sizable hole in their balance sheet.

Sonnenblumen wrote: »

Yes I've read some similar reportings, hard to know for sure, I think there's a hint of negative speculation in the media. But either way, I do not foresee any major upset if a RI is called? Pity about the divi. The company is making a strong recovery and this is evident in the SP.

If the news is already in a tabloid like the FT id expect the share price to rise on Wednesday

Every little helps

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