Investors head for the check-out as Tesco's woes continueAlex Forrest Whiting
The UK Financial Reporting Council is the latest to announce that it is ‘monitoring’ the situation at Tesco. It follows revelations that the company overstated profits by GBP 250 million. An investigation is being carried out but on top of falling market share, a declining share price and three profit warnings, Financial Analyst Louise Cooper says things aren’t looking good for the retailer.
Cooper says that the main problem is an issue of ‘low visibility’ – trying to work out what is going on at Tesco is almost impossible. The share price has fallen almost 25% in less than a month and is trading around GBP 1.93. Sales are down 4.5% with its market share at 28.8%. Discount store, Aldi, meanwhile has continued its run of double-digit growth with sales up 29.1% in a year. Lidl too has seen an increase of 17.7%. Cooper warns that shares will only be traded sideways for the foreseeable future.
On the plus side, Cooper believes that shareholders will now be prepared to give the new CEO Dave Lewis time to turn the ship around.