business news in context, analysis with attitude

The Financial Times reports that Tesco "has issued its fourth profit warning in the space of a year, slashing £1bn from a trading profit forecast it made less than four months ago as it approaches the end of what has been an annus horribilis."

According to the story, "An adviser to Tesco said that the 'resetting of supplier relationships' in the UK was one of the main reasons behind the warning. Tesco’s trading statement outlined a 'new commercial approach' that would 'underpin stronger long-term relationships with our suppliers . . . ensuring that revenue recognition is transparent and appropriate'."

Tesco currently is under investigation by the British government because of profit projections it made early this year that were too high because of both an understatement of costs and an overstatement of fees it would be receiving from manufacturers, with some suggesting that tits supplier relationships had turned toxic because of a high level of arrogance at Tesco headquarters.

FT also writes that "the trading statement comes a day after the UK’s accountancy watchdog warned that retailers must provide much more clarity about the extent and nature of payments they receive from their suppliers in their audited accounts."
KC's View:
What a mess. It almost defies understanding, though I think that the whole arrogance and toxicity thing probably is key … and it goes back years.