In Ireland, the Independent reports that Tesco's business there overstated its profits last year by the equivalent of about $98 million (US). The reason, according to the paper, is $96 million (US) in supplier payments to the company that were "incorrectly" booked as profits.
According to the story, "Irish suppliers to Tesco have long complained privately about the payments demanded by the retailer to stock their products. The latest results statement gives the first indication of the extent of these payments. It also seems to show that payments from suppliers to Tesco Ireland are far higher than those demanded by its UK parent."
According to the story, "Irish suppliers to Tesco have long complained privately about the payments demanded by the retailer to stock their products. The latest results statement gives the first indication of the extent of these payments. It also seems to show that payments from suppliers to Tesco Ireland are far higher than those demanded by its UK parent."
- KC's View:
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If these numbers are correct, it suggests that Tesco is a prime example of a retailer that is making money on the buy rather than on the sell. If these numbers are correct, it certainly gives us some idea of how Tesco may have lost its way. Demanding these kinds of payments from suppliers cannot help but create a corrupting influence on how a retailer does business.
