so - when do we buy Tesco ?

Part of the problem, from you know where, is the new culture of " if you haven't been bankrupt at least 3 times you are not trying hard enough " It lets the crooks get away with it too as well as the incompetent, until one can't tell one from the other.

That top jockey from the COOP is a prime example as well as Fred the Shred and the people who appoint them from the old boys club imho

As little as possible will be done because they are nearly all in the club.
 
Dave Lewis, the newly-instated chief executive of Tesco, has just 13 days left before he is due to update investors on the probe into how the retailer overstated its first half-year profit guidance by £250m.

The former Unilever executive has been given “carte blanche” to look at every aspect of Tesco, according to insiders, to rebuild trust with the City and customers after issuing three profit warnings in as many months.

Aside from selling the company’s five corporate jets, Mr Lewis could look to offload assets ranging from its family-friendly restaurant chain Giraffe or Tesco Bank. Alternatively, he could take the more radical route of tapping his own shareholders for cash.

So what are his options for shoring up Britain’s biggest supermarket?

Scrap the dividend

Tesco has said it will cut the interim dividend by 75 per cent, saving almost £300m compared with last year. But it has not yet given any guidance on the final dividend. Jaime Vázquez, analyst at JPMorgan Cazenove, estimates that scrapping the final dividend would save about another £800m.

Rights issue

Bankers say that Tesco could raise up to £3bn through a rights issue to strengthen its balance sheet and help create a war chest to fight its rivals on price wars. Shoring up its capital would also give Mr Lewis scope to top up Tesco’s pension fund, which had a deficit of £3bn at February 2014.

Investors are divided over whether they would support a rights issue. One institutional fund manager with a small holding in Tesco says that if the company deals with the issues behind the profit overstatement in a “transparent way and the chief executive sets out a definitive plan on how he is going to turn the business round, he will get the funds he needs”.

But another smaller shareholder says he would rather see Tesco sell assets that are not earning a sufficient return than raise equity. “Its unfathomable to do a rights issue while you are paying a dividend,” the shareholder says.

By making a cash call sooner or later, argues, Dave McCarthy, HSBC’s food retail analyst, Mr Lewis would limit the ability of its competitors to go down a similar route.

“Investors should only back one horse in this race and a financially reinforced Tesco would represent a more serious threat to its competitors,” says Mr McCarthy. He believes the move could choke off one of the options for J Sainsbury, potentially pushing it towards cutting its dividend. “It’s a game of thrones,” he says.

Bankers say that an early rights issue would give Tesco breathing space to decide if and when to sell off assets.

“It effectively says, ‘this is a pill that, as a shareholder, is worth swallowing, because it is going to put us on a much stronger footing. Therefore, we are going to be able to take the decisions we need to to take about assets, rather than being on the back foot’,” says one banker.

Tesco says it is not currently considering a rights issue.

The A list

Some bankers have drawn parallels between Mr Lewis’s position and that of Georges Plassat, when he became chief executive of Carrefour, two years ago.

One key difference was that Carrefour had some very valuable assets, which it was quickly able to sell. The most notable of these was Colombia, which it sold for an enterprise value of €2bn – 20 times historic earnings.

Tesco is in a slightly different position. Its most valuable assets would be its Asian operations, with South Korea the jewel in its crown. Analysts estimate that these assets could be worth between £8bn and £10bn.

Dave Lewis, a former Unilever executive, recently replaced Tesco chief executive Philip Clarke
But bankers say that letting Asia go would leave Mr Lewis’s growth options limited once he has turned round the UK. A full or partial listing would be another option.

Dunnhumby, the data analysis business that helped create Clubcard, is another valuable asset. Private equity and trade buyers are circling, with valuations up to £2bn mooted.

Asset sales

Tesco has other assets that it could offload. In central Europe, the group operates in Poland, Hungary, the Czech Republic and Slovakia. Mr Vázquez estimates that this collection of businesses could be worth about £3bn. However, he says there are few obvious buyers, and in some countries, there are restrictions on deals, making the process of putting a firm valuation on the assets tricky. “Its binary,” he says. “If you find a buyer, the countries are worth that amount. If you don’t they are not.”

Similarly, Tesco Bank could be sold, floated, or a partner brought in – a reverse of the deal it struck six years ago when Tesco bought out Royal Bank of Scotland for £950m. Mr Vázquez estimates that 100 per cent of the bank could be worth £1.5bn-£1.7bn. However, he points out that the link to Tesco is “integral to the bank’s relationship with its customers”.

Tesco could also jettison some its non-core assets including Blinkbox, the video streaming service as well as coffee chain Harris + Hoole and Giraffe restaurants, which the group only acquired last year for £50m.

Dobbies garden centre could be attractive to a mid-market private equity group, and analysts at Sanford Bernstein value it at £180m. The One Stop convenience chain – which sits in one of the few growth areas in food retail – could also fetch almost £500m, according to Bernstein.

Getting on with the day job

But bankers say that with Tesco’s own probe of the profit overstatement led by Deloitte, as well as the FCA investigation, it may be difficult to draw up the necessary documentation for a rights issue or for shareholders in the event of a significant asset sale.

With Christmas approaching, Mr Lewis will also need to spend time on trading. Insiders say that the effect of any decisions he makes will be felt by customers first. This will be necessary, because, according to one senior retailer, for the rest of the grocery sector, the crisis at Tesco, “is the best Christmas present they have ever got”.
 
A director of Tesco (Xetra: 852647 - news) has begun drawing up a list of possible successors to the beleaguered chairman of the UK's biggest retailer as it battles to contain the fallout from a £250m accounting crisis.

Sky News has learnt that Patrick Cescau, who serves as Tesco's senior independent director, has told leading investors in the last week that the company is preparing for a range of scenarios, including the exit of Sir Richard Broadbent.

Mr Cescau, a former boss of Unilever (NYSE: UL - news) , has also made it clear that he does not want to be considered for the chairmanship himself, one institutional shareholder said.

A search for Sir Richard's successor has not yet reached a formal stage, and Tesco's board has not made a definitive decision that he will leave.

It remains unclear whether Mr Cescau has reached out to any of the potential candidates for the chairmanship.

Some shareholders have made it clear that they believe the imminent departure of Sir Richard would be counterproductive as Dave Lewis, Tesco's new chief executive, works on his plans to improve the company's fortunes.

"He [Mr Cescau] was transparent about the fact that this is happening but everybody understands that replacing the chairman now might further destabilise the company," a major Tesco investor said on Monday.

Sir Richard is supportive of the work being undertaken by Mr Cescau to begin examining a list of potential replacements, the investor added.

The Wall Street Journal reported last week that Sir Richard would consider stepping down once an investigation had concluded into the reasons for Tesco overstating half-year profits by approximately £250m.

The disclosure prompted a sharp fall in Tesco's already-depressed share price and the suspension of five senior executives.

Announcing the probe last month, the chairman said he wished to remain in his post but that shareholders would decide whether he "was part of the problem or part of the solution".

A number of investors have privately expressed support for John Gildersleeve, a former Tesco executive, to succeed Sir Richard, while Archie Norman, the former Asda boss who now chairs ITV (LSE: ITV.L - news) , is also regarded as a possible frontrunner.

Separately, insiders said that Mark Armour, a former finance director of Reed Elsevier (LSE: REL.L - news) , would replace Ken Hanna as chairman of Tesco's audit committee during the course of next year.

Tesco declined to comment.

Lets hope the directors DON'T pick another lemon.
 
the key for the Tesco's board is not to panic ...........

they are in charge of the UK supermarket business ..regardless of what people think of them .........

they are easy to knock and every other supermarket board is sitting pretty as the fall guys get hammered ..no pressure apart from that small thing called xmas

the newish board (assuming they also get an old hand now in to steer the helm - (bloody needed as well............been a bunch of amateurs recently.......they need a name )

1) throw out all the cr*p and bad news now (as they are)

2) Rally the troops across every shop and at all levels - tell them everything they do affects the future of the business and everyone is important (they are doing this)

3) reach out to every customer new and old ............and go for the throat at xmas .....overspend on clubcard points, promotions, marketing in store ...........and spare nothing in being the best supermarket for service , quality and price matching during that busy time

4) and for christs sake get some decent branding in place ..........we can all see the gameplan of the visible brands........Tesco's is confused and weak.........even if they line up celebs do it properly for christs sake......find some brand strengths and hammer them home..........

great opportunity to line up the opposition and nail them to the wall........that's how you win back the points

N
 
the key for the Tesco's board is not to panic ...........

they are in charge of the UK supermarket business ..regardless of what people think of them .........

they are easy to knock and every other supermarket board is sitting pretty as the fall guys get hammered ..no pressure apart from that small thing called xmas

the newish board (assuming they also get an old hand now in to steer the helm - (bloody needed as well............been a bunch of amateurs recently.......they need a name )

1) throw out all the cr*p and bad news now (as they are)

2) Rally the troops across every shop and at all levels - tell them everything they do affects the future of the business and everyone is important (they are doing this)

3) reach out to every customer new and old ............and go for the throat at xmas .....overspend on clubcard points, promotions, marketing in store ...........and spare nothing in being the best supermarket for service , quality and price matching during that busy time

4) and for christs sake get some decent branding in place ..........we can all see the gameplan of the visible brands........Tesco's is confused and weak.........even if they line up celebs do it properly for christs sake......find some brand strengths and hammer them home..........

great opportunity to line up the opposition and nail them to the wall........that's how you win back the points

N


People are creatures of habit.

It will like trying to raise the Titanic. A lot of effort to get those feet back in there I reckon.

Window dressing will not do.

Need blood curdling price war now!!!
 
tesco effective pull out china with CRE deal, time sell last year. cant put west food and culture on plate, can japan they so sorry they take anything.
 
I suspect we need to see how xmas goes .........I also suspect that tesco already have PR strategic announcements ready if needed to bolster the SP...........when we see the announcements come we know they are really concerned about the SP falling further and the cogs start rolling........brinksmanship at the moment as every week of planning and preparation of new strategies will bring better long term dividends for the group
 
Is it time to buy, 165 ?

Was over at Tesco extra over the w/e and didn't feel any buzz.

fwiw - I reckon sales will continue dipping. Didn't spend much either. Shop more now at my local groceries...

Wouldn't be buying anything right now. Impending doom and gloom. (n)
 
Loads of people at my local Tesco, with reduced boxes of chocolates etc. at the door.

I did notice that the bin for the poor is near empty. maybe they just emptied it ?

Poor leadership at the top has near sunk Tesco like the CO-OP.

Who made a £250m hole in the accounts ? Hopefully not the tip of the Iceberg.
 
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Tesco's business model is now outdated. Even now I'd be looking at the possibility of a short if I was doing UK shares. Notwithstanding that, our local Tesco Metro has the freshest and best tasting veg in the district.
 
Tesco need a new CEO, the current guy is a winger. Easy way to turn the share price around shut the sheds down (Tesco Extra) or downsize them. The costs of running the things 24 hrs is uneconomical considering the hike in gas and electric.
Also the market likes lay offs but he is keeping on people. The other more drastic solution is to get out of food retail altogether and re-invent themselves on line. After all what's your profit from
27p toothpaste?
 
It's difficult, isn't it? When was it? 15-20 years ago Next's shares went down to penny status? I was too scared to get them at that price and bought them, finally, at something just over 100p. They had no debt and 120 million pounds cash! I was trying to find the catch.


Supermarket shares are different, though. They have so much uncovered debt that it is difficult to sort it out.
 
I still think that the top hogs should bear some responsibility for incompetence, gross mismanagement etc. just as they used to. The American way of shrugging it off just isn't good enough. That man at the top of the COOP ruined 150 years work with his nonsense.
The directors who appoint these useless bosses should also face substantial penalties imho and not just pass the buck onto the shareholders.

Toughen up politicians or mind out the way imo.

:devilish:
 
Tesco's business model is now outdated. Even now I'd be looking at the possibility of a short if I was doing UK shares. Notwithstanding that, our local Tesco Metro has the freshest and best tasting veg in the district.[/QUOTE]

welcome to the future .........they are all at it ........and will all close some of those out of town abominations (or sublet them to other brands/services)
 
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