Tesco profits fall by 90%

Author
Discussion

Wills2

22,666 posts

174 months

Thursday 23rd October 2014
quotequote all
Welshbeef said:
Very true - but they need to get back to core business refocus on that and deteine what market place Tesco should play in job done (instead of jack of all trades).
Agreed.

BoRED S2upid

19,641 posts

239 months

Thursday 23rd October 2014
quotequote all
It's still a whopping amount of profit and they still have a huge market share in the uk. It won't take much to recover we are creatures of habit. I imagine people will also make a fortune from the share price as well.

unrepentant

21,212 posts

255 months

Thursday 23rd October 2014
quotequote all
Pwig said:
unrepentant said:
Foliage said:
unrepentant said:
Sales down 5% is massive in an industry where margins are skinny.

The chairman is rightly resigning, his eye was off the ball. They shouldn't be paying severance to any of the directors or senior people who leave over this business but I bet they do.
Margins aren't skinny the massive drive to drowned the store in own brand has seen to that (which could be part of the problem), its not margins that are the issue. Its market share, they are losing out massively to Aldi and Lidl, Morrison are now weighing in with massive price reductions that is causing them massive issue with share price I believe as their profits are down, Sainsbury's continue their push with a new price reduction campaign and continued store modernisation.
Tesco have an average GM of just under 20%. That may be good for the FMCG sector but it's skinny for retail. Many other sectors in retail operate with GM's of 45-50%. With margins that small and turnover and overheads that high a decline of a few points in turnover can be catastrophic.
Try working for the motor trade. If you make 5% you are doing well hehe
That's net Pwig, Tesco makes about 3-4% net.

Luxury car GM's are not so bad. wink

Welshbeef

49,633 posts

197 months

Thursday 23rd October 2014
quotequote all
Bradgate said:
Indeed. The ordinary staff will be absolutely shafted by the drop in the share price.

The directors won't care, though. They will still get their multi-million pound payouts.
I assume you mean SAYE in which case unless there a scheme ends this year then the employees would elect if its less than they paid in to take the cash - SAYE is utterly risk free especially with 0.5% interest rates.



DJRC

23,563 posts

235 months

Thursday 23rd October 2014
quotequote all
Is a "Buyer" one of those ppl in the "business" side of things with no actual knowledge of anything vaguely useful in life except business admin?

You know, when you look around your project and ask your colleagues "WTf are the nobbers in the burton suits?" And you get told " oh them, I think they are part of the business function or admin or something" ...

Sir Humphrey

387 posts

122 months

Friday 24th October 2014
quotequote all
Poor products and poor sales lead to poor profits.

Good to see the free market moving to companies which provide either a better service or better prices.

Welshbeef

49,633 posts

197 months

Friday 24th October 2014
quotequote all
Sir Humphrey said:
Poor products and poor sales lead to poor profits.

Good to see the free market moving to companies which provide either a better service or better prices.
Poor products? I'd would say the vast majority of all the brands are present in every big player some with more or less SKUs



However lets take fresh sausages - premium ones. They have countless finest ones then Harrogates one SKU one sku black farmers and that's it - from the stores I've been in of late. Compare and contrast to Waitrose.... Gourmet fresh sausages easily 5 brands will multiple SKUs and the bigger stores even more very little own label.



pad58

12,543 posts

180 months

Friday 24th October 2014
quotequote all
Strangely they are just about to open two stores in my town. weird.

hidetheelephants

23,747 posts

192 months

Friday 24th October 2014
quotequote all
Ali G said:
Gosh, another case of big accountants 'surprised' by firms they've audited for years actually having been cooking the books. A tedious repeat of the banking crisis, yet 'lessons will be learned'.

greygoose

8,224 posts

194 months

Friday 24th October 2014
quotequote all
hidetheelephants said:
Ali G said:
Gosh, another case of big accountants 'surprised' by firms they've audited for years actually having been cooking the books. A tedious repeat of the banking crisis, yet 'lessons will be learned'.
I am not sure of the point of auditors if they can't spot such things, seems to be just a small group of big firms charging a lot of money for a service that is pointless, may be I am missing something.

turbobloke

103,742 posts

259 months

Friday 24th October 2014
quotequote all
greygoose said:
hidetheelephants said:
Ali G said:
Gosh, another case of big accountants 'surprised' by firms they've audited for years actually having been cooking the books. A tedious repeat of the banking crisis, yet 'lessons will be learned'.
I am not sure of the point of auditors if they can't spot such things, seems to be just a small group of big firms charging a lot of money for a service that is pointless, may be I am missing something.
Possibly missing an Auditor job with PwC / Deloitte / Grant Thornton / KPMG / EY et al but probably not missed too much at the moment wink

alfaman

6,416 posts

233 months

Friday 24th October 2014
quotequote all
Welshbeef said:
Poor products? I'd would say the vast majority of all the brands are present in every big player some with more or less SKUs



However lets take fresh sausages - premium ones. They have countless finest ones then Harrogates one SKU one sku black farmers and that's it - from the stores I've been in of late. Compare and contrast to Waitrose.... Gourmet fresh sausages easily 5 brands will multiple SKUs and the bigger stores even more very little own label.
A really interesting point.

Tescos have obviously shifted more premium volume to the 'finest' range from branded as Tesco owns the brand and can switch ( or beat up) suppliers of 'finest' range to keep up margins.

Only works as long as your consumers want it - and you can get suppliers.

A few years back I worked for a major UK brewer - fortunately we had the no. 1 'must stock' premium lager brand and ale brand. Tesco are viscious with even branded suppliers- we had a policy of never brewing 'own label' - it's like signing your own death sentence....

On another note : when back in the UK this summer - the Tesco stores I went in seemed rather dismal and empty compared to 3 years ago when I left the UK .

alfaman

6,416 posts

233 months

Friday 24th October 2014
quotequote all
greygoose said:
I am not sure of the point of auditors if they can't spot such things, seems to be just a small group of big firms charging a lot of money for a service that is pointless, may be I am missing something.
The accounting screw up seems to me that either :

1/ their internal accounting policy allowed the timing mismatch ... In which case it should have been picked up by their corp governance processes / and their audit committee ( which has independent directors )- IDs should resign ...


2/ their accounting policy was fine : but the accounts / P+L not stated in accordance with policy. In which case the CFO , FD and controller should all go.


....funnily their UK FD left for another FD job about 6 months ago - before the st hit the fan

scratchchin


crankedup

25,764 posts

242 months

Friday 24th October 2014
quotequote all
BIANCO said:
Adrian W said:
while Tesco adopt a policy of promoting young graduates over experienced staff things can only deteriorate, of course they can't fail as it was someone more seniors idea, and so on and so on, basically the directors (senior managers) are so far up their own arses there were always heading for a fall. That is when they are not out being lavishly and expensively entertained by suppliers who dare not participate.


Edited by Adrian W on Thursday 23 October 14:04
This I worked for Tesco a few years and witnessed this a number of times, gormless graduates walking straight into manager jobs with no life skills or experience what so ever. A few times within just a few years they where store manager level. And not surprisingly many made a complete tit of it and then they where normally then transferred to head office jobs.

I’m not surprised its going up st creak the way they treat their experienced long term staff who made Tesco so successful in the first place.
One of our pals kids worked for Tesco, wasn't for long though as the Company was one of the worst they had worked for. Treated staff like something they had trodden in. Retail is apparently quite a tough sector to work in but 'T' stood out as appalling attitude toward staff. Maybe the new C.E.O. will add this to his list of 'to do'.

Adrian W

13,848 posts

227 months

Friday 24th October 2014
quotequote all
crankedup said:
BIANCO said:
Adrian W said:
while Tesco adopt a policy of promoting young graduates over experienced staff things can only deteriorate, of course they can't fail as it was someone more seniors idea, and so on and so on, basically the directors (senior managers) are so far up their own arses there were always heading for a fall. That is when they are not out being lavishly and expensively entertained by suppliers who dare not participate.


Edited by Adrian W on Thursday 23 October 14:04
This I worked for Tesco a few years and witnessed this a number of times, gormless graduates walking straight into manager jobs with no life skills or experience what so ever. A few times within just a few years they where store manager level. And not surprisingly many made a complete tit of it and then they where normally then transferred to head office jobs.

I’m not surprised its going up st creak the way they treat their experienced long term staff who made Tesco so successful in the first place.
One of our pals kids worked for Tesco, wasn't for long though as the Company was one of the worst they had worked for. Treated staff like something they had trodden in. Retail is apparently quite a tough sector to work in but 'T' stood out as appalling attitude toward staff. Maybe the new C.E.O. will add this to his list of 'to do'.
Very unlikely, first thing he did was make all head office staff go to store for two days per month, they now have expensive senior managers stacking shelves as the stores don't know what to do with these people. . they are then having to work their nuts off to catch up the time lost.

The way the staff see it is, this is 50000 hours per year, so if they can do it he can get rid of people, so yet another boss who does not understand the business he is running.

Raify

6,552 posts

247 months

Friday 24th October 2014
quotequote all
The buyers I talk to are having to do 1 day per 10 in the stores. Crazy waste of time.

Magog

2,652 posts

188 months

Friday 24th October 2014
quotequote all
Sounds like the John Timpson method of management, not sure it's that scalable though!

crankedup

25,764 posts

242 months

Friday 24th October 2014
quotequote all
Adrian W said:
crankedup said:
BIANCO said:
Adrian W said:
while Tesco adopt a policy of promoting young graduates over experienced staff things can only deteriorate, of course they can't fail as it was someone more seniors idea, and so on and so on, basically the directors (senior managers) are so far up their own arses there were always heading for a fall. That is when they are not out being lavishly and expensively entertained by suppliers who dare not participate.


Edited by Adrian W on Thursday 23 October 14:04
This I worked for Tesco a few years and witnessed this a number of times, gormless graduates walking straight into manager jobs with no life skills or experience what so ever. A few times within just a few years they where store manager level. And not surprisingly many made a complete tit of it and then they where normally then transferred to head office jobs.

I’m not surprised its going up st creak the way they treat their experienced long term staff who made Tesco so successful in the first place.
One of our pals kids worked for Tesco, wasn't for long though as the Company was one of the worst they had worked for. Treated staff like something they had trodden in. Retail is apparently quite a tough sector to work in but 'T' stood out as appalling attitude toward staff. Maybe the new C.E.O. will add this to his list of 'to do'.
Very unlikely, first thing he did was make all head office staff go to store for two days per month, they now have expensive senior managers stacking shelves as the stores don't know what to do with these people. . they are then having to work their nuts off to catch up the time lost.

The way the staff see it is, this is 50000 hours per year, so if they can do it he can get rid of people, so yet another boss who does not understand the business he is running.
Reading your post about what is going on with staff if the new C.E.O. isn't going to sort these issues he may as well start looking for another job. Staff has to be the largest single element in business that are efficient and 'happy'. Nothing worse than asking a sales assistant to assist and be met with Mr or Mrs Grumpy, they are the face of the business.

mad4amanda

2,410 posts

163 months

Friday 24th October 2014
quotequote all
Sharted said:
Good.

The CEO of a previous employer (who hated me) used to bang on about TESCO and how brilliantly run they are - now we know that they are st just like he was!

I'm glad.
it sounds entirely possible we have some shared employment history, if so he hated me too and bought some extremely dubious practices to the trading team! Said CEO had also been in ASDA too as I recall?

SpeckledJim

31,608 posts

252 months

Friday 24th October 2014
quotequote all
loose cannon said:
I'm no buisiness expert but the bigger these company's get the bigger likely hood that they crash and burn !
Nope!