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TescoGate Live: What the national business press said of Tesco's 92% profits fall

Published:  23 October, 2014

The national media's business press has been busy this morning analysing Tesco's half-year 92% drop in pre-tax profits and even larger accounting black hole and looking at ways it can get itself out of the mire and back to leading the UK grocery retail market.

Graham Ruddick, retail editor of the Telegraph, believes one of the biggest challenges facing is re-gaining the trust and support of the City and its own investors. He wrote: "Shareholders are furious at what they see as a failure of governance at Tesco, and Sir Richard (Tesco chairman) has paid the price."

The Guardian's business editor Nils PratleyThe Guardian's business editor Nils PratleyA lack of strategy is what Tesco shareholders will be concerned about said Pratley in today's Guardian

The Guardian's financial editor, Nils Pratley, believes Tesco is in danger of remaining "in a strategic vacuum".  "That is likely to be likely to be shareholders' biggest worry today," he writes on today's TheGuardian.com.

He added: "How can Dave Lewis consider asking shareholders for a helping hand, through a rights issue, if he can't outline his grand turnaround plan? He can't even tell them who the next chairman will be."

He urged Lewis to reveal a "new strategy as soon as possible in the new year". "Errors with revenue recognition are one thing; what shareholders want now is a recognisable strategy."

Telegaph's retail editor Graham RuddickTelegaph's retail editor Graham RuddickRuddick argued the case that UK business and the economy needs a strong Tesco and that it is in everyone's interests that it finds a way back to its former glories

But Ruddick also stresses it is in the country's overall economic interests that a business as big and as important as Tesco recovers quickly and to see it shifting from one crisis to another "does not serve Britain well". "Ultimately, Tesco should be a force for good in the UK."

He explained:  "Tesco employs 310,000 people in Britain, making it one of the biggest employers in the country. The vast majority of these employees are hard-working and dedicated, but today they are working in a company shrouded in uncertainty and scandal.

"The company is also an ambassador for British business abroad. Tesco was one of our finest business exports. It is the market leader in South Korea, Thailand and parts of Eastern Europe. Brand Britain is being damaged by its downfall."

Even people's pensions will be hit by Tesco's problems, stressed Ruddick, as some of the UK's biggest pension funds have stakes in the company which has seen its value halve in the last year.

BBC's business editor Kamal Ahmed BBC's business editor Kamal AhmedAhmed reveals that a former senior Tesco executive told him that

A lack of strategy is what Tesco shareholders will be concerned about said Pratley in today's Guardian

A point also seized upon by the BBC's business editor, Kamal Ahmed, in his detailed analysis of the Tesco crisis on the BBC's website. "If too many major British businesses fail, then that not only means bad news for UK Plc and, in this case, the supply of groceries - it also means bad news for our savings and the government's tax income."

The whole saga, argued Ahmed, leaves Tesco with a major problem of trust. "If you cannot trust a business's accounts, then there is not much left to trust."

He goes on to reveal private conversations with a former senior Tesco executive who headed up "a large number of supply chains" who told Ahmed that "at the end of each half year approached, heads of division would put out a call".

" Find me £30m would be the message"

" Find me £30m would be the message," the former executive told Ahmed. "That would cascade down to the buyers and they would demand more and more from suppliers."

Ahmed added: "It seems that, as Tesco's trading position deteriorated, actions became more and more desperate."

 Ruddick, meanwhile, urged Tesco to return to the roots of its founder Jack Cohen "who wanted the local community to have access to cheaper food".

"Tesco must, and can, return to these roots. Not just for the sake of the company's profits, but for its employees, shareholders, and shoppers."

Celebrated newspaper columnist, Andreas Whittam Smith, writing in the Independent said that in all his years of reporting he "had never heard anything like" the Tesco accounting crisis. "At least not on this scale, or by such a prestigious company." He added: "It registered on my private Richter scale as a financial earthquake."

Ruddick argued the case that UK business and the economy needs a strong Tesco and that it is in everyone's interests that it finds a way back to its former glories

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