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Tesco Supermarket Left Reeling As More Investors Dump Shares

Troubles Continue For Tesco As Investors Take Fright...
Asa Bennett
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File photo dated 31/12/13 of customers with their shopping leave a Tesco store as Britain's biggest supermarket is expected to post a third successive quarter of worsening sales when latest trading figures are published.
Rui Vieira/PA Wire

Tesco has been left reeling after a raft of big banks and fund managers dumped shares in the troubled retail giant.

Deutsche Bank sold 18 million shares worth £40 million for its clients yesterday, on top of the £6 million it sold last month, the Independent reported. Invesco and State Street have also followed suit, selling £8 million and nearly £1 million worth of shares respectively.

The latest blow comes after American investment firm Harris Associates was reported to have slashed its stake in the grocer by nearly two thirds, warning that it had become "too risky' to invest in.

Tesco's biggest investors have sold nearly £400 million in shares over the last two months, like Axa, Brewin Dolphin, Scottish fund manager Walter Scott & Partners, ABN Amro, JPMorgan and Legal & General.

This comes in the same week as Dave Lewis took over at Tesco as its new boss, coming from the consumer goods giant Unilever. His predecessor, Philip Clarke, was forced to resign after the retailer revealed its worst trading figures in 40 years.

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Lewis told the Evening Standard on Monday that he planned to offer a "fresh perspective" as Tesco's new chief executive.

Explaining why he took the job at Britain's biggest retailer, Lewis said: “I needed to find out for myself whether I can lead a whole business. Some people think that is crazy given some of the jobs I have done but actually I don’t think you know whether you can truly lead a business until you sit in that seat.”

Six Reasons Tesco's Dominance May Be Finished
Tesco can't shrug off its poor performance(01 of06)
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Clarke blamed the dip in sales on cutting prices, moving away from vouchers and the disruption from refurbishing a large number of stores.However, Bernstein Research's Bruno Monteyne estimates that if you took out such costs, their like-for-like sales would still have dipped by 2%.
Tesco is trying too hard to appeal to everyone (02 of06)
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Discount retailers like Asda specialise in offering good deals, while fancy supermarkets like Waitrose are without equal at providing luxury. So Tesco is trying to be a mix of everything, other customers are lured away by more specialised rivals.
Others are doing what Tesco is trying, but better(03 of06)
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Tesco "has been increasing prices way too fast over the last few years to keep up earnings growth," Monteyne points out.As a result, compared to discount retailers like Asda, Tesco is at least 4% more expensive for shoppers.
1 million fewer customers are visiting a week(04 of06)
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The proof that Tesco is having some issues comes in the footfall, as the chain seems to have lost more than 1 million customer visits a week, worth £25 million in sales.
Tesco has never done this badly (05 of06)
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Clarke, who has worked for 40 years at Tesco, admitted: “I have never seen a quarter’s like-for-like sales like this before, that I can remember."Monteyne told Radio 5 Live the results were "the worst in their history."
Even Tesco's boss isn't confident (06 of06)
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“I see every day the improvements that are coming in the business, but I’m not making any promises about sales improving in the next few quarters," Clarke warned today. Meanwhile, other analysts like Julie Palmer at Begbies Traynor think Clarke "doesn't seem to have a clear turnaround strategy". He'll have to work hard to prove them wrong.
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