It's Not Just The Accounts: Absolutely EVERYTHING Is Going Wrong At Tesco Right Now | ||
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Tesco's profits for the 26 weeks through to Aug. 23 are out today. As expected, they're not pretty. The results give us a good look at how serious the world's second-largest retailer's problems are. The company confessed to a massive gaffe in an earlier results release this year, overstating profits by £250 million. Now they've been revised up to £263 million. But the group was already struggling with a series of extra headwinds before it admitted the blunder in September. It isn't just about dodgy accounting — sales are down both domestically and internationally, and even the company's pension plan is struggling. And the CEO and his managers are restricted from focusing on the underlying business because the accounting probe is such a big distraction, CEO Dave Lewis said today. Here's everything in the results that show us Tesco is seriously struggling:
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Tesco CEO Says He Had No Idea The Chain Was About To Implode When He Took The Job (TSCO) | ||
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When former Unilever executive Dave Lewis took over as Tesco's new CEO in July — three months earlier than expected — he had no idea of the time bomb he was inheriting. In September, the world's second largest retailer announced that it overestimated its first-half profits by £250 million ($408 million), sending shares crashing. The British-based grocery chain swiftly axed four senior executives and hired an independent firm, Delloite, to investigate the accounting scandal. On Thursday, the Delloite review confirmed that Tesco overstated its profits by £263 million, an increase from the initial estimate. The company also announced that Sir Richard Broadbent would step down as chairman. A bunch of other executives have been asked to leave, too. The company also reported a steep fall in sales and revenue, down 4.6% and 4.5%, respectively. Pre-tax profit is down 91.9% from the same period last year to £112 million. In addition to addressing the disastrous results, Lewis discussed in a CEO call how the investigation has been progressing thus far: "The Tesco part of the investigation and the Delloite part of investigation has been focused on identifying around commercial income exactly what the numbers are." Lewis also said that Delloite has prevented the company from continuing its own investigation: "What we can’t do is start an investigation around how those numbers came about and what it was that caused those numbers to be there because there will be an investigation by the regulator and we will be very open and very proactive in our support of their investigation but it’s not for us to start that investigation — that’s something that we have to support them with. So we have to wait for that." What's more, Lewis made the extraordinary admission that he would have taken the executive role even if he had known about Tesco's structural problems before being given the job. It is a surprising statement because it implies that the people who hired him — Broadbent et al — did not tell him about the disaster looming inside Tesco's books until after he arrived. Lewis had some idea that things were sliding at Tesco, of course. When former CEO Philip Clarke stepped down, revenue was tanking. Tesco's problem's were market-related and Lewis, a marketing guru, was probably under the impression he could swoop in and turn things around. But Tesco's problems actually ran much deeper (words like "cover-up" and "whistleblower" are being thrown around), something Lewis was probably not aware of. SEE ALSO: The World's Second Biggest Retailer Is Getting Hammered As Profits Collapse 90% Join the conversation about this story »  | ||
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An Antarctic Explorer's Notebook Is Discovered After A Century Trapped In Ice | ||
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Wellington (AFP) - A photographic notebook from Robert Scott's ill-fated Antarctic expedition has been found after a century trapped in the ice of the frozen continent, New Zealand's Antarctic Heritage Trust said. It belonged to scientist George Murray Levick and was discovered outside Scott's 1911 Terra Nova base during last year's summer ice melt. Writing in the notebook remains legible but the binding has been dissolved by years of ice and water damage, the trust's executive director Nigel Watson said. "It's an exciting find. The notebook is a missing part of the official expedition record," he said. "After spending seven years conserving Scott’s last expedition building and collection, we are delighted to still be finding new artefacts.” He said the pages of the notebook were taken to New Zealand and individually preserved, then given new binding and returned to Antarctica, where the trust is working to preserve five sites used by explorers Scott, Ernest Shackleton and Edmund Hillary. Scott's expedition split into two groups after reaching the Antarctic, with the leader's contingent reaching the South Pole on January 17, 1912, only to find Norwegian Roald Amundsen had beaten them there a month earlier. Scott and his companions later died of exposure and starvation. Levick was in the other group, which travelled along the coast to make scientific observations but became stranded from the base camp when pack ice prevented their ship from picking them up. The six men all survived the Antarctic winter by digging a cave in the ice and eating local wildlife, including penguins and seals. Other discoveries made by the trust include bottles of whisky taken on Shackleton's 1908 expedition and lost negatives from his 1914-17 foray to the Ross Sea. The contents of Levick's notebook are fairly mundane, comprising the dates, subjects and exposure details of photographs he had taken. Much more interesting was a scientific paper he wrote titled "Sexual Habits of the Adelie Penguin", which was lost until researchers at London's Natural History Museum rediscovered it in 2012. In it he records observations of the penguins' "depraved" habits, including homosexual behaviour and males trying to mate with the bodies of dead females. Levick was so horrified at the penguins' antics that he wrote down some of his observations in Greek so the average reader could not understand them and his paper was never publicly released.
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Publicis CEO Admits Earnings Statement Contains 'Pure Rhetoric' And Lousy Results Are His Fault For Being Distracted (PUB) | ||
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Maurice Lévy the CEO of advertising agency holding group Publicis Groupe, just admitted his company’s lousy results in the last quarter were his own personal fault: He was distracted by the doomed, $35 billion merger with Omnicom that would have created the world’s biggest agency network but collapsed in May. Publicis — which owns agencies including Saatchi & Saatchi, Starcom MediaVest and Leo Burnett — reported organic/like-for-like revenue growth of just 1% to $2.2 billion (1.7 billion Euros) in its third quarter, which picked up slightly on the previous quarter but was not in line with expectations. Publicis also said the full-year results will be similar to the first nine months — a very low level of growth. On the company’s earnings call Lévy said the blame for those disappointing results should be placed on him. “I should take responsibility for that. We have been too much focused on our project [with Omnicom] and we are paying the price for that.” What makes the confession all the more surprising is that Omnicom also reported quarterly results this week and not only did its boss John Wren barely mention the merger, but the company reported solid earnings. Lévy referenced this in the call and basically admitted that Publicis was obviously the more interested party in the merger than Omnicom: “[Omnicom] probably did not believe much in the merger, maybe believing more in the takeover and that has really been the difference.” Lévy even scolded an analyst for “reading too much into” his statement in Q3 earnings report that read “management was too focused on other plans.” (It's extremely unusual for a CEO to suggest to analysts that they ignore the verbiage in their own earnings statements.)
Now, however, Lévy believes the vast majority of Publicis’ issues are behind it. Other challenges had included a “sharp decline” in analog advertising (down 3.1% in the quarter) and the underperformance of its Razorfish agency. Publicis says on Nov. 7 it will announce a new 2018 strategy plan aimed at growing the business by more than 100 basis points and its margins by at least 200 basis points over the next four years. Join the conversation about this story »  | ||
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French PMI Comes In Horrible, As Europe Collapse Continues | ||
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France's PMI figure, a common business survey measure, fell to 48 and is now at an 8-month low. Anything below 50 represents contraction. The current is figure is bad news, indicating that France's economy overall is back in recession. That is in comparison to Germany, which got a shot in the arm today: Its PMI score is at 54.3, the highest in three months. Manufacturing was particularly good, edging back out of the contraction territory it looked like it was in last month. France's manufacturing is dreadful in comparison, coming in at 47.3. Economists had expected a 48.5 print. According to Twitter's Econhedge, the sub-index for new orders is falling even further, down to just 45.2. That's a strong signal that things could get even worse in the months ahead. What's worse, the employment situation is deteriorating at the fastest pace in about 18 months. France's unemployment is already very high, at over 10%. Join the conversation about this story »  | ||
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