Crisis at troubled supermarket group Tesco deepens as it slashes profit forecasts by a thirdPress conference underway nowAnother Tesco profits warningCEO marks 100th day in charge with more gloomShares tumble 16% 9.19am GMT What are you really doing different with your suppliers, in plain English?We are taking any incentives that exist between us and the supplier, and moving it to between us and the customer, Lewis replies. 9.15am GMT Morale among colleagues in store is really very high, Lewis insists. 9.14am GMT And what do you mean about not artificially boosting performance in the final quarter of the financial year?There are ways of running the machine slightly leaner in the final quarter, but that would have a detrimental impact on customer service, Dave Lewis replies. 9.13am GMT More details about the investment in availability please, Dave.Lewis: If you walk around a Tesco store, you’ll see that we have invested in availability and price in “The thousand lines that people most value”. The staple good that people buy, basically. 9.11am GMT Tesco has made five key changes since Lewis took over, he says.1) Changing the way it deals with suppliers 9.08am GMT Onto questions.. What changes have been made to Tesco’s relationship with suppliers. Has it abandoned its policy of seeking rebates from suppliers in return for selling their stock?Dave Lewis explains that “We have started to rebase our relationship with suppliers”.... to create long-term sustainable value together. 9.04am GMT There are reasons to be “quietly optimistic” about what we’re doing, says Lewis.And we have taken a very deliberate decision not to take short-term measures that would close the profitability gap in the short term, but would not improve relations with customers and suppliers. 9.03am GMT And we’re off. Dave Lewis says he wants to give some context to today’s profit warning.We weren’t in a position to give full profit guidance back in October, when we began to outline our plans. But now we have much more visibility about the impact that our plans will have on short-term profitability, he says. 9.00am GMT Tesco is about to hold a conference call with journalists to explain today’s profit warning. I’m dialled in - there’s some very soothing classical music (Vivaldi I think) 9.00am GMT Europe’s stock markets are all in the red this morning. The FTSE 100 now down 80 points or 1.2%, dragged down by retailers and oil firms. 8.56am GMT Breaking away from Tesco, the Greek stock market has tumbled by over 6% in early trading.Investors are spooked by the news of a presidential election next week; and the possibility that it could trigger an early general election.#Greece - Athens market terrified by early presidential election news. Opens down -5.84% 8.53am GMT Here’s the Telegraph’s Graham Ruddick’s take:Tesco's annual results next April likely to be grim - the fall in sales and profits means huge, ie billions, of property writedowns likelyAnalysts forecast that Tesco profit margins in the UK now just 1.2pc - down from a peak of 6pc in Sir Terry Leahy days 8.49am GMT Tesco says it has made changes under Dave Lewis, including taking on another 6,000 store staff, and ‘invested in price’.The early feedback from customers is encouraging, it says.We believe the CEO needs to simplify the business via UK and International asset sales, then reconnect with suppliers by changing payment terms and lowering his cost of goods and then start on the long road to rebuilding the Tesco brand with shoppers.All this could take several years and suppliers are not going to be disposed to Tesco given the negative industry volumes and poor performance of Tesco over the last two years. 8.45am GMT #Tesco shares now at key long term support levels. will it hold? pic.twitter.com/DTgcE271Gt 8.40am GMT How the mighty have fallen....The decline of a giant. Tesco now valued at just £12.8bn, down from almost £40bn in 2007. http://t.co/RAM9KQG4Em pic.twitter.com/bLuTNGM1rd 8.39am GMT Tesco could be forced to tap its shareholders for cash in a rights issue, suggests Marc Kimsey, senior trader at Accendo Markets in London:A fire sale of assets is almost nailed on and a rights issue cannot be ruled out. Traders are clearing the decks of what remaining stock they had, and that of sector peers. 8.38am GMT Supermarkets and energy companies are dominating the list of biggest fallers on the FTSE 100, as Tesco’s profit warning and the sliding oil price hit shares. 8.33am GMT Morrison’s and Sainsbury’s shares have both been hit, down around 5%.Analyst Nick Bubb reckons they’re vulnerable to a Tesco price war:If Sainsbury, Asda and Morrisons thought that Tesco would delay any aggressive price-cutting until after Xmas, Dave Lewis has upset the apple-cart today... 8.30am GMT Around £2bn has been wiped off Tesco’s value this morning, reducing its market capitalisation to around £13bn.Tesco price graph so far today. About £2 billion wiped off market value. pic.twitter.com/Lx0vAGRVtc 8.25am GMT Today’s profit warning is “brief and patchy on detail”, and gives Tesco’s critics plenty more ammunition, says Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.If there had been hope that the market would be immune to yet another profit warning, this quickly evaporated as Tesco has provided profit guidance which is nearly 30% shy of an already lowered estimate. The company partially attributed the lower figure to increased investment in the business, but amidst the accounting mishap, the revolving door in the boardroom and an unforgiving attack from the discount retailers, investors have simply lost interest in waiting for a recovery story which still seems some way off. 8.20am GMT Retail analyst Nick Bubb says Tesco has shocked the sector with a ‘huge’ profit warning:Just when the market thought Tesco were prepared to tough it out for Xmas they go and announce a huge profit warning, flagging that full-year trading profits will not exceed £1.4bn, some 20-30% below recent expectations, because of unspecified actions to improve UK competitiveness... 8.16am GMT Tesco’s share price just touched a new 14-year low of 155.4p, a level not seen since early 2000, as this chart shows: 8.07am GMT Crumbs! Tesco shares have plunged by over 14% at the start of trading in London, to 161p, as this morning’s profit warning triggers a wave of selling. 8.03am GMT Shares in rival supermarket Sainsbury’s have tumbled 4% at the start of trading in London, as Tesco’s profit warning ripples through the sector. Tesco hasn’t actually traded yet, suggesting shares are going to slide.... 8.02am GMT Tesco’s latest profit warning comes hot on the heels of an eventful Black Friday, which exposed some of its failings.Police were called to 15 stores to restore order, after crowds scuffled over bargains. And its website was offline for hours, unable to cope with the surge in demand. Dave Lewis can’t have been impressed.... 7.59am GMT I reckon this is the fifth time this year that Tesco has warned the City that profits will be below expectations. The first profit warning came in January after a weak Christmas; a second in July which cost CEO Phil Clarke his job; a third in August when Tesco also slashed its dividend; then the shock news in September that profits had been misreported by around £250m. 7.43am GMT Tesco is actually admitting that this year’s profits could be a billion pounds lower than its own estimate back in August, as FT deputy news editor Tony Tassell flags up:actually Tesco warning is worse than last tweet suggested.The £1.7-2.2bn range was analyst forecasts. In Aug, Tesco had forecast £2.4-2.5bn.Cut-price forecasting from @tesco: 14/15 profits £1.4bn - down £1bn on prev guidance (City f'casted £2bn) due accounting/poor performance 7.40am GMT What a way for CEO Dave Lewis to mark his 100th day in charge at Tesco!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.100 days at Tesco - Do you think that Dave Lewis is having second thoughts #tesco 7.32am GMT Tesco shares are set to tumble when the stock market opens in half an hour - perhaps by as much as 10%.Market watchers expecting #Tesco shares to drop around 10% when they open this morning due to that profit warningTesco closed at 187p. Expected to open below 180p 7.27am GMT Tesco, Britain’s supermarket giant, has hit the City with another profit warning.And it’s a whopper.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 £1.4bn.Tesco to undershoot profit targets by c30% as they revise FY profit estimate down to £1.4bn #tesco 7.26am GMT Good morning, and welcome to our rolling coverage of the financial markets, the world economy, the eurozone and business.Coming up today.... Continue reading...
 |
| READ THE ORIGINAL POST AT www.theguardian.com |
