Tesco shares - worth a punt?

[wasabi]

Did I hear the radio news correctly earlier? The SFO have formally announced an investigation into Tesco, after they were caught rigging profit reporting?

Oh, the rigging wasn't the news, the SFO formal investigation was. My earlier sentence wasn't that clear.

Yeah - it al seems to hinge on booking rebates on promotions and rigging the returns system to artifiiall create income before the real sale. Best case it might mean the missing £250 million will eventually materialise. Or not... Like I said earlier, lots of sales people rig returns to hit their targets - Tesco seem to have perhaps lost control of this, or been wilfully dishonest - again time will tell. Missing £250 mill is nothing compared to their pension problems, debts combined with borrowing rates on bonds, and the fickle nature of public buying habits.

A lot of criticism of them seems odd though - for example the move by the public away from out of town megastores to smaller shops. Tesco have that covered better round here at least than the other supermarkets - almost all the old Spars / rural post-office type places are now Tesco.

[HalloweenJack]

I have the misfortune of working for them, cant talk for other people but for me they are slave drivers and i work to the best i can and still there not happy. Never worked for a company that worked there staff so hard and were never happy. Even when the shares were at record highs the atmosphere wasnt good. Imagine what it is like for us now

not in express are you? I was in express but have moved ....

[SeriousSam]

The meteoric rise of Tesco was founded on two main factors;

1. Land grab - they were better than anyone else at buying up space to build new stores in areas where people would notionally go to shop
2. Trade up - with a more prosperous society, as it was at the time, their advertising lured in people that were normally discount shoppers with the idea that they could have more for less i.e. quality at an affordable price

So with the increasing saturation of the land space and the economic downturn it was inevitable that their growth rate would suffer, and was something that I had hypothesised about for quite some time. However, by no means did I predict this level of catastrophic failure. I cannot speak for those that worked directly for them, but as a food industry professional and thus what is like working "with" them as suppliers. There was a time when they were brutally ruthless so it wasn't a pleasant experience, however that did change* and they slowly began to shift towards being more of a partnership. So there was an expectation that they could move with the times, albeit without the clear dominance that they had before.

* Ironically Coke and Unilever may have had a hand in this in some respects by putting them back in their place so to speak

What I think eventually put them in this position is that tried to fight on all fronts rather than picking the battles they could win. By this I mean they clung onto the foolish notion that they could have Sainsbury quality and sell at Iceland prices. Thus their marketing was aimed at an ever shrinking demographic, whereas everyone else's was clearly targeted and successful e.g. Sainsbury and Jamie Oliver. This also meant that they lost sight of other opportunities, e.g. partnerships, which were snapped up by M&S in particular with their link to BP.

So in regards to the topic, the question you have to ask yourself is "what are they going to do to get themselves out of this mess?". Clearly there has to be radical change, but it needs to be much more than business structure as their whole "more quality for less price" identity is no longer relevant or even feasible. At this stage I see no evidence that they have a plan that goes that far. They are like an addict who thinks he can manage his habit. Consequently I don't think they have hit rock bottom yet and thus there will be more troubles ahead, which will further knock their share price. At this point I have serious doubts as to whether they are "worth a punt", at least if you are after short or medium term gains. Longer term is a different matter as the foundations which Sainsbury have built their success on are also shaky, so thinks are likely to change again. Whether or not Tesco will be in a position to take advantage really depends on what they do in the 6-12months.

[Ravens Nest]

not in express are you? I was in express but have moved ....

No i am in distribution, where they enslave you with an electronic device on your arm which times your every movement and your questioned on any still time you have.

Where it is all hidden away from the general public, if you have seen the dispatches programme on C4 about Amazon that will give you some idea what its like there (Amazon is much worse though)

[HalloweenJack]

No i am in distribution, where they enslave you with an electronic device on your arm which times your every movement and your questioned on any still time you have.

Where it is all hidden away from the general public, if you have seen the dispatches programme on C4 about Amazon that will give you some idea what its like there (Amazon is much worse though)

sounds like dotcom - both drivers and pickers , idle time for drivers (and ofc tracked routes) , and pick rate for pickers `why is your pick rate in amber a lot` - 140 items an hour is not easy

was in express - now that can be hard work when your short with late grocery coming - but in the kiosk now , so get the `best` of the customers....

[Ravens Nest]

sounds like dotcom - both drivers and pickers , idle time for drivers (and ofc tracked routes) , and pick rate for pickers `why is your pick rate in amber a lot` - 140 items an hour is not easy

was in express - now that can be hard work when your short with late grocery coming - but in the kiosk now , so get the `best` of the customers....

Yes just like dotcom 210 items an hour at my work place, it was 140 then slowly raised every year but the percentage stays the same (Minimum 90-100% depending on terms and conditions)

[quentium]

I have the misfortune of working for them, cant talk for other people but for me they are slave drivers and i work to the best i can and still there not happy. Never worked for a company that worked there staff so hard and were never happy. Even when the shares were at record highs the atmosphere wasnt good. Imagine what it is like for us now

Do you still currently work with tesco? I've been working with them for around 5 months now and I haven't had that experience at all. Maybe I got lucky with my line manager?

[TeePee]

Currently showing 185p, a 9.5% rise from 169p on the day the thread posted. The FTSE100 is up 5.7% since the same date.

[kalniel]

Currently showing 185p, a 9.5% rise from 169p on the day the thread posted. The FTSE100 is up 5.7% since the same date.

I make the Tesco gain ~8%. 183p now, from 169p on 28th Oct.

Which is OK, but compared to some others I track
Apple: 13.21% increase
Smith & Nephew: 14.01% increase
Vodafone: 16.55% increase

not quite so good.

FTSE100 has just slumped a bit today too.

edit: or compare it to other supermarkets if you want to be slightly depressed...

Morrisons: 16.41% increase
M&S: 19.27% increase

[RobbieRoy]

I make the Tesco gain ~8%. 183p now, from 169p on 28th Oct.

Dead cat bounce?

[kalniel]

I make the Tesco gain ~8%. 183p now, from 169p on 28th Oct.

Dead cat bounce?

Any meaningful comment I have on this might stray into advice, and given I may have a position on shares either mentioned or in the sector it's best I keep to historical observation. So the only thing I can say is: time will tell

[Ravens Nest]

Do you still currently work with tesco? I've been working with them for around 5 months now and I haven't had that experience at all. Maybe I got lucky with my line manager?

Good for you, nice to hear some places there arent so bad.

I still work there over 10 years i have worked there, and seen it getting worse every year but its much worse now much worse. desperate to maximise profits and work us all to the bone in the process.

[TheAnimus]

And today it's down again.

Did those buy hold for this long?

[Darkmyst]

I have Tesco shares, and watched them drop to the floor, if they keep failing I will be surprised, however I don't see a recovery until early 2016. If Christmas sale have not improved 2014 then we will see a bigger drop early 2015. Shorters are making a killing, and sooner or later they will have to close there positions.

[kalniel]

if they keep failing I will be surprised

Don't look at today's news then..

[Jonatron]

Quite happy TSCO is down. Hopefully they'll eventually be worth 0.