What a difference a year can make! With news of Tesco wrongly predicting its yearly profits by over £250 million pounds, its another low point during a grim 12 month period. Things seem to be going from bad to worse for poor old Tesco;
  • Marketing share is down to 28.8%, lowest in decades.
  • More competitive environment with newcomers gaining market share. Aldi sales increased by 29.1% and Lidl sales were up by 17.7%.
  • Tesco has seen over £2 billion wiped off its market share.
  • Tesco's third biggest investor, BlackRock, sold £150 million worth of shares.
  • Share price is down by a staggering 40% in the past year
  • Four senior directors have been suspended, while the Serious Fraud Office and the Financial Conduct Authority are said to be looking into the situation.
The current situation has led Tesco to bringing in new Finance Director, Alan Stewart, three months early as they've been operating without a financial director for nearly 6 months! 

So Tesco's profit target of £1.1bn for this year was optimistic, and it should have been closer to £850m, which is about half of last year's number. Although £250 million might not look like a huge amount to Tesco, it is more than many high street retailers earn in a full year. Tesco explained the problem as "'principally due to the accelerated recognition of commercial income and delayed accrual of costs", the pressure from slightly disappointing sale figures over the last few years has led to this catastrophic error which has really damaged the company.

It's gone from a pioneer in customer loyalty, to trailing behind successful schemes such as Waitroses. Waitrose offer free coffee and a newspaper when they come into the store, however with the clubcard customer more accrue points and 'earn' discounts. 

Some people are taking pleasure from this situation and believe it to be karma as Tesco have a reputation for bullying suppliers into low prices, delaying the payment of invoices and also buying land and property to stop competitors.

Dave Lewis, new Tesco Group chief executive, is under a lot of pressure to restore the brand to its glory days, he uncovered the scandal and seems the right man to get them out of this situation. There is a small silver lining in that Mike Ashley, who has a history of successful business investment, has announced he has taken out a put option on 23 million Tesco shares (representing 0.28% of the firm's capital), which effectively means he's taken a bet with Goldman Sachs that Tesco shares will recover.