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Tesco - The World's Second Biggest Retailer Is Getting Hammered As Profits Collapse 90%
Topic Started: 23 Oct 2014, 09:34 PM (1,530 Views)
peter fraser
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The World's Second Biggest Retailer Is Getting Hammered As Profits Collapse 90%

Mike Bird 23/10/2014

Tesco’s results are out today for the first half of the year , and they have been hammered. Shares are down more than 5% just as the London Stock Exchange opens Thursday, adding to the last month’s brutal sell-off.

• Like for like sales are down 4.6%, trading profit is down 41% to £937 million, and revenue is down 4.5%.

• Statutory profit before tax is down 91.9% to just £112 million for a business with revenue 300 times that. Dividends per share have collapsed to just 1.16 pence, a 75% decline.

• Tesco’s embarrassing profit over-estimation has been revised up to £263 million. That’s £118 million in the first half of this year, £70 million for 2013-14 and £75 million for previous years

• Earnings per share are through the floor. For continuing and discontinued operations, they’re down from 10.17 pence to just 0.07 pence, a 99.3% decline.

• Chairman Sir Richard Broadbent is standing down. Here’s his statement:



“Once this transition is complete and business plans are in place, it will mark the beginning of a new phase for the company and I will begin now to prepare the ground to ensure an orderly process for my own succession at that time. My decision reflects the important principle of accountability on behalf of the Board and will support the company to draw a line under the past as it enters the next phase of its development.”
New CEO Dave Lewis added “Our business is operating in challenging times. Trading conditions are tough and our underlying profitability is under pressure.”

In a note, James Abbott at Accendo Markets says this is “a fall in organic British sales described as the worst performance in 40 years” in the City of London.

Back in September Tesco was forced to restate its profits, which it had exaggerated by £250 million. Since then, the share price has plunged and world-famous investor Warren Buffet has said his confidence in the retailer was a “huge mistake.”

The share price is now down to £1.83 from £3.71 a year ago, collapsing by more than 50%:

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Edited by peter fraser, 23 Oct 2014, 09:48 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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Fewer jobs and falling wages may help, internet sales too.

Just the bigger picture evolving Peter. ;)
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newjez
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Tesco are crap. They've done a Nokia and badly misread the market. Warren buffet should have known better. They need a serious rethink to reinvent themselves. We shop at lidl and waitrose. High and low quality mixture.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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peter fraser
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newjez
23 Oct 2014, 10:57 PM
Tesco are crap. They've done a Nokia and badly misread the market. Warren buffet should have known better. They need a serious rethink to reinvent themselves. We shop at lidl and waitrose. High and low quality mixture.
Sometimes a humble shopper has a better insight into a retailer than an experienced investor who lives afar.

What could Buffet use for analysis other than the trading figures, and if they are overstated then his analysis will be wrong. But your shopping experience doesn't lie.
Edited by peter fraser, 24 Oct 2014, 07:46 AM.
Any expressed market opinion is my own and is not to be taken as financial advice
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miw
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peter fraser
24 Oct 2014, 07:44 AM
Sometimes a humble shopper has a better insight into a retailer than an experienced investor who lives afar.

What could Buffet use for analysis other than the trading figures, and if they are overstated then his analysis will be wrong. But your shopping experience doesn't lie.
That's why there is a whole profession known as the "secret shopper". At least some people agree that the customer experience does not lie and try to find out what it is really like in a systematic manner.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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jesusjones
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Good glad they are losingoney :) we need more big retailers here to
Compete with Coles and Woolworth also..
They are soon going to be doing battle
With small high street express stores ie:
Same size as IGA's, also pharmacies..

Not good for Australians just having two giant retailers.
We need more..
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newjez
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jesusjones
24 Oct 2014, 06:10 PM
Good glad they are losingoney :) we need more big retailers here to
Compete with Coles and Woolworth also..
They are soon going to be doing battle
With small high street express stores ie:
Same size as IGA's, also pharmacies..

Not good for Australians just having two giant retailers.
We need more..
I'm not really sure what your trying to say.

Are you saying you want more bigger retailers or more smaller convenience stores?

Do you want tesco in Oz?

Oz is a very different situation to the UK from a fresh food perspective at least.

You need true competition to have gains. Having more retailers without true supply side competition wont get you much.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Foxy
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Zero is coming...

Maybe they stopped selling food??

Peter
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Steve99
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Tescos is a very poor employer, low wages as per all supermarkets in the UK, harsh employer practices like 'fuck you up the bum' contracts that say you work 2 hours per day and Tescos decides on a whim which 2 hours you will work. But what they dont understand is that 1000's of other British companies treat their employees like this also and thus they, tesco's ex customers, are now more inclined to cut their cost of living to the bone in order to survive and hunt down the best value for money.
The race to the bottom is how you would describe the process of globalisation and modern economics. Its all a benefit according to the politicians but its not until their shares suffer that they even see the problem and even now probably don't and will say that Tescos wages and costs are too high.
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TheTruth
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Steve99
26 Oct 2014, 05:41 AM
The race to the bottom is how you would describe the process of globalisation and modern economics. Its all a benefit according to the politicians but its not until their shares suffer that they even see the problem and even now probably don't and will say that Tescos wages and costs are too high.
And yet people in the UK earn more, work less and live longer than the OECD average. At the same time they are less satisfied than average.

So I guess many of them are just ungrateful whiners like you.

http://www.oecdbetterlifeindex.org/countries/united-kingdom/

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