Blog: Amid the turmoil, Tesco sales continue to slide
Dean Best | 23 September 2014
Mixed news this morning for Tesco. The under-pressure UK retailer has managed to install new CFO Alan Stewart earlier than planned. However, fresh sales data out of the UK shows Tesco's sales remain in the doldrums.
Stewart, who Tesco hired from Marks and Spencer, had been due to start in December. However, 24 hours after Tesco's accounting problems left it subject to some severe criticism from investors, it announced it had been able to get Stewart to join the business today.
It is, on the face of it, one piece of good news for Tesco. However, financial oversight at the UK's largest retailer has been called into question after yesterday's admission it had over-stated expected first-half profits by GBP250m, not least because since Laurie McIlwee stepped down as finance director in April, the company has not had someone in the top finance job.
Tesco chairman Sir Richard Broadbent, facing some stiff questioning yesterday about financial controls at the retailer, sought to play down the gap between McIlwee's exit and Stewart's arrival by insisting "the finance function has been operating and overseeing the business as you'd expect".
McIlwee, Broadbent said, had been "available" during the transition. The over-statement of profits, Broadbent claimed, was an event that was "out of the ordinary" and he added: "The fact we don't have a CFO in the office every day at this moment does not mean to say the finance function is not being overseen."
However, those questions may grow after claims in the UK press that McIlwee, had not been asked to Tesco's HQ nor met with auditors since he left in April.
Recently-installed Tesco CEO Dave Lewis is set to announce Tesco's first-half results on 23 October and investors will want answers on the retailer's financial controls and, of course, on the progress his investigation has made on identifying what led the retailer to over-state its expected earnings.
There is, at present, a stark feeling of uncertainty in the investment community. "Tesco has a CEO and a CFO in place for its interim results on 23 October, which we welcome. More broadly, however, we remain somewhat in the dark as to the ongoing financial substance of yesterday's announcement and we can only hope that the P&L, cash flow and balance sheet implications are within present guidance from the company for the full year," Shore Capital analyst Clive Black said today.
A couple of hours after Tesco's announcement on Stewart, Kantar Worldpanel issued its latest market share data for UK grocers. And, again, it made less than appetising reading for Tesco. The retailer's sales tumbled 4.5% in the 12 weeks to 14 September, with its market share falling to 28.8%, compared to 30.2% a year earlier.
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