Major retailer overstates profits forecast.

[cee-dee]

So, the largest retailer in the country has overstated it's profits forecast by around £250 million?

It's been admitted that the company has been losing business/customers to the two discounters with whom they're in competition but also I wonder if other factors have been at work contributing to the loss?

Over the past few months, a young lady who works for them has been complaining about the amount of fresh food that goes to waste because too much has been bought and the manager(s) have not made sufficient efforts to sell it before it goes off.

As whistleblowers get trodden on, it's difficult to get too specific but usually, when a product is nearing the time when it has to be removed from sale, the store attempts to sell it by reducing the price but that has to be done soon enough in order for sufficient customers to see that and take up the discount.

One product in particular has been subject to a large loss several times and just last week the same product was facing £500 worth going to waste.

It was repeatedly pointed out to the manager that with the quantity available for sale, the only way to shift that remaining was to drop the price considerably but the manager only consented 2 hours before closing leading to hardly any being sold and the remaining stock being consigned to waste.

That's only one fresh product in one store but I wonder if similar things are happening with many other products in the other 2700 stores?

[evoman3957]

One of the oldest tricks in Life's Book, making people perceive you are doing better than you really are. People do it through ALL walks of Life, from individuals to Multi-National Companies. It maintains kudos among piers, it keeps people backing you, it attracts friends ( who don't want to be associated with failures ), it makes people feel safe and most of all; it allows those that practice it to carry on living their cosy lifestyles................but it is a House built on Sand. Don't feel sorry for those that practice it, because they showed no such scruples while doing so.

[lambsy_uk]

A sizeable amount of course however £250,000,000 is only 7.5% of Tesco annual profit; though it's being reported as if it were a much higher proportion and they were facing impending doom!

There's still a healthy £3,000,000,000 annual profit to keep this company valued at £35,000,000,000 going!

[evoman3957]

It was still enough to make the value of their shares drop by 11% this morning and when people are struggling to find returns of better than 5% on their savings, at the moment, losing 11% isn't going to make them very happy............and as for the pension companies, that have them in their port folio...........well enough said !!

[lambsy_uk]

Yes you are right, I was just trying to provide some balance.

[upthecreekyetagain]

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@evoman3957 wrote:

It was still enough to make the value of their shares drop by 11% this morning and when people are struggling to find returns of better than 5% on their savings, at the moment, losing 11% isn't going to make them very happy............and as for the pension companies, that have them in their port folio...........well enough said !!

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A more accurate way of looking at it is that the Tesco shares have been trading at 11% above their true value for some time.

[evoman3957]

It doesn't matter whether they are trading above or below what some faceless entity ( not you obviously, I'm talking in trading terms ) thinks they should be trading at. If you buy them at the going rate, you lose 11%.......end of story. If they make 11% tomorrow, then you've STILL lost money because ( to keep the Maths simple ).........if you have £100,000 worth of shares and lose 11%, then you lose £11.000...........you then only have £89,000.........if the next day they make 11%, they make 11% of £89,000 NOT £100,000........which is £9750........so you'll now have £98,750 instead of £100,000.......so you've STILL lost £1,250. That's just on £100,000, if you want to start adding zero's; then add them to the losses as well. There's going to be little comfort knowing that you bought them at a higher price than they SHOULD have been trading at, you just bought them at the price they were at.

[joe_bloggs*]

Unexpected item in the profit area.
They became too big and powerful,more or less threatening suppliers,farmers and to some extent council planners,there's 2 within driving distance from me and they're both soulless like aircraft hangers,they tried expanding abroad and that didn't work,people are going in droves to the discounters Aldi & Lidl.maybe now they might have to flogg off the land banks they are sitting on and let house building take priority,you can see what's coming next,personnel reassesment--sackings

[evoman3957]

They are trying to be ALL things to ALL People, allowing you to buy every conceivable item of food you can think of; from a left legged lobster from Lapland, to a right legged Rhinoceros stake from Rhodesia. Aldi sell a couple of versions of each item, which most people ( including Me ) are quite happy with.

[joe_bloggs*]

They built a new Aldi near me (which we use regularly) and the car park is like a luxury car showroom (well apart from my old citroen) a lot of people have lost their snobby attitude which they had when Aldi first opened over here,I know you get rushed through the checkouts,at least they don't use those self service ones,and the staff get a better rate of pay,But remember to take your own carrier bags

[evoman3957]

Obviously standard service and format, the one near us is the same. The OH has begun taking Me along, because everything comes off the conveyor so fast; She can't handle it................there's ALWAYS a downside!!

[**forum-decorum**]

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@cee-dee wrote:

So, the largest retailer in the country has overstated it's profits forecast by around £250 million?

It's been admitted that the company has been losing business/customers to the two discounters with whom they're in competition but also I wonder if other factors have been at work contributing to the loss?

Over the past few months, a young lady who works for them has been complaining about the amount of fresh food that goes to waste because too much has been bought and the manager(s) have not made sufficient efforts to sell it before it goes off.

As whistleblowers get trodden on, it's difficult to get too specific but usually, when a product is nearing the time when it has to be removed from sale, the store attempts to sell it by reducing the price but that has to be done soon enough in order for sufficient customers to see that and take up the discount.

One product in particular has been subject to a large loss several times and just last week the same product was facing £500 worth going to waste.

It was repeatedly pointed out to the manager that with the quantity available for sale, the only way to shift that remaining was to drop the price considerably but the manager only consented 2 hours before closing leading to hardly any being sold and the remaining stock being consigned to waste.

That's only one fresh product in one store but I wonder if similar things are happening with many other products in the other 2700 stores?

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I wouldn't be at all surprised if it happens in all their stores, my daughter works for said company and our local one is just down the road from us so we use it a lot, so we get to know quite a bit about it.

In the 4 odd years that she has been working there, the standards of everything has dropped, it used to be a really good place to work but not anymore, and the foodstuffs that go to waste is criminal, especially when we know how many starving children there are in the world.

When the shop does drop it's prices to shift perishable goods they don't drop it enough. I have to say though, because my daughter and her fiance both work there we benifit a little because a lot gets reduced further an the staff can get it.

I will say though, it isn't just the food stuffs they manage poorly either, they don't look after the workers like they used to. I am considering just out of principal never to shop there again because of how they have treated both my daughter and her chap. Trouble is I doubt they will bat an eye lid.

[upthecreekyetagain]

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@evoman3957 wrote:

It doesn't matter whether they are trading above or below what some faceless entity ( not you obviously, I'm talking in trading terms ) thinks they should be trading at. If you buy them at the going rate, you lose 11%.......end of story. If they make 11% tomorrow, then you've STILL lost money because ( to keep the Maths simple ).........if you have £100,000 worth of shares and lose 11%, then you lose £11.000...........you then only have £89,000.........if the next day they make 11%, they make 11% of £89,000 NOT £100,000........which is £9750........so you'll now have £98,750 instead of £100,000.......so you've STILL lost £1,250. That's just on £100,000, if you want to start adding zero's; then add them to the losses as well. There's going to be little comfort knowing that you bought them at a higher price than they SHOULD have been trading at, you just bought them at the price they were at.

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For every share bought at the artificially high price one was sold - for every pound lost a pound was gained.

[cee-dee]

Just focussing on the overstatement of the profit forecast and the impact on the share price is ignoring the fundamental problems at the company which has led to the massive drop in sales.

By trying to reduce big numbers down to a percentage of this, that or the other is just a way of attempting to minimalise (even hide) the impact of the actual figures.

The company has lost its way big style.

[evoman3957]

You'll have to run that "Irish" logic past me again, I understand that to buy a share at the high price; one had to be sold at that price also. However, while 11% was being wiped off of their value ( which ran into £ Billions ) nobody was buying were they; that's why the price was dropping. When people start buying again, the price stabilizes; but they wouldn't start buying, until the shares reached a point where they felt they wouldn't drop any further ( and that's open to conjecture ). So in no way could the Pound lost, be a Pound gained; until the Share value recovered to its original level.........and even then you would lose, as I explained in My earlier post, because the percentage gain was from a lower base.

[ed_blackadder_1]

Waste, too big for their boots , awful staffing levels. Customers want decent food for decent prices and to be able to get what they want.
I speak from personal experience the level of moral is very low and no one listens to the staff.
As for more money being spent updating stores and extra staff. Codswallop no sign where we are.

Trying to be too many things to too many people.

[upthecreekyetagain]

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@evoman3957 wrote:

You'll have to run that "Irish" logic past me again, I understand that to buy a share at the high price; one had to be sold at that price also. However, while 11% was being wiped off of their value ( which ran into £ Billions ) nobody was buying were they; that's why the price was dropping. When people start buying again, the price stabilizes; but they wouldn't start buying, until the shares reached a point where they felt they wouldn't drop any further ( and that's open to conjecture ). So in no way could the Pound lost, be a Pound gained; until the Share value recovered to its original level.........and even then you would lose, as I explained in My earlier post, because the percentage gain was from a lower base.

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Share dealing is like any other form of gambling - with the 'house cut' being represented by brokerage charges.

For each share bought there is a seller and vice versa - there is no new money made nor lost overall in the actual dealing.

The only time that equation changes is when new shares are issued.

[ed_blackadder_1]

I know my shares are worth half what they were 5 years ago. Not worth selling them. So hopefully they will go back up one day.

[joe_bloggs*]

Not a lot of sympathy on twitter,from a dairy farmer:

Dear @Tesco Its not very nice having your expected profits completely evaporate is it? Yours sincerely; all at UK #Farming and #teamdairy

— Tim Gibson (@Robotmilkman) September 22, 2014

[evoman3957]

I agree that there is a finite number of shares ( only varied by new issues ) and that finite number is traded to and fro, between buyers and sellers. However there is NOT a finite amount of Money, implying that as one share increases in value; another must therefore decrease in value. If that was the case, the overall value of the Stock market would not increase; indicating new money / wealth had been created and the Stock market would not crash ( as it has done in the past ) indicating all value / money had been lost. Money of course, in the sense WE are talking about it, is only on Paper anyway and not cash. However, it is generated and lost, in terms that people understand, when it comes to them cashing in their investments or pension pots.