The high street crisis deepened yesterday after City watchdogs launched an investigation into bogus profit claims at Tesco while Sainsbury’s revealed a disastrous fall in sales. The giants are suffering because middle income families have switched to Aldi and Lidl in what industry experts see as the biggest change in shopping habits in 30 years. The Financial Conduct Authority (FCA) is investigating allegations that Tesco executives ‘cooked the books’ to make it appear the company made £250m extra in profits. The FCA is investigating Tesco under the Financial Services Markets Act to establish whether it was guilty of issuing incorrect, false or misleading information to investors . The scandal came against the backdrop of the fact that millions of customers have switched to the thriving budget chains. This same threat is turning the screw on Sainsbury’s, which yesterday revealed that sales were down by 2.8per cent over the last three months compared to a year ago. The FCA is investigating Tesco under the Financial Services Markets Act to establish whether it was guilty of issuing incorrect, false or misleading information to investors. Four of the company’s most senior executives, including UK managing director, Chris Bush, have been suspended pending the outcome of an investigation that is likely to take more than six months. Last month, Tesco told the City that profits for the six months to August 23 were about £1.1bn, however this was not correct and the real figure was some £250million lower . The City watchdog has the power to demand the company hands over documents and emails, while executives can be compelled to take part in interviews to explain their actions. Last month, Tesco told the City that profits for the six months to August 23 were about £1.1bn, however this was not correct and the real figure was some £250million lower. Tesco launched its own inquiry involving outside accountants and lawyers, however the FCA has decided the situation is so serious that it needs to investigate. If it finds evidence of wrong-doing, penalties range from public censure through to large fines for the company and individuals. In a worst case scenario, it is possible executives might be guilty of market abuse which could, in theory, lead to a prosecution for criminal misconduct and a jail sentence. All of the ‘big four’ supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – have come under fierce pressure from the budget chains. At the same time, families are buying less food and they have turned away from using big hypermarkets in favour of making smaller, more regular purchases from convenience stores. The established chains have been dragged into a price war to try and keep customers happy, but this is decimating their profits. The Tesco scandal has wiped more than £3billion off the company’s share value in the last ten days, while the shares in other grocers have also suffered. The new chief executive of Sainsbury’s Mike Coupe said food shopping is undergoing its biggest change in the 30 years he has been in the industry. The company has responded by slashing up to 5p a litre off the price of fuel in order to get people through the door. It has also introduced a new promise to ‘Brand Match’ the lower prices charged by Asda. The same store sales at Sainsbury’s for the three months to September 27 were down 2.8per cent on the same period last year. Looking ahead, it fears sales over the crucial Christmas period to be down on a year ago. Mr Couple explained the fall, saying: ‘The market remains dynamic and fiercely competitive. The long-running trend of more frequent, convenient shopping has accelerated, resulting in smaller basket sizes. ‘Our performance has been impacted by the accelerated pace of change in the grocery market, including significant pricing activity.’ Julie Palmer, retail expert at Begbies Traynor, offered a grim assessment, saying: ‘The supermarket price war has taken its toll on Sainsbury’s whose fantastic run of growth over nine years under former CEO Justin King has come to an abrupt end. ‘Performance over the last quarter has been very weak and the pressure is now on Mike Coupe to reassure shareholders that they are not sleepwalking into a Tesco-like crisis. 'Sainsbury’s will need to pull out all the stops over the next few months if it is to escape the worst of the malaise set to descend upon the UK’s big four grocers’ ‘The announcement to cut 5p off fuel and simplifying it’s ‘Brand Match’ offer will do little to mask the disappointing figures. ‘With the all-important Christmas trading season approaching, it will be interesting to see if this strategy of lowering prices on thousands of its products will be enough to deter competition from the likes of Aldi and Lidl who seem to have the most attractive offering to shoppers looking for value.’ Analyst at Planet Retail, David Gray, said: ‘These results mark a watershed moment for both Sainsbury’s and the wider UK grocery industry. The sharp decline in like-for-like and total sales at the retailer will send shockwaves across the market. ‘First it was Tesco, then Morrisons, and now even Sainsbury’s is reeling from the effects of seismic structural changes rumbling across the UK food sector. No-one is immune to the effects and there is no hiding place.’ He added: ‘No gaping holes in the company accounts and a slightly less diabolical performance than Tesco are hardly achievements to shout about. Sainsbury’s will need to pull out all the stops over the next few months if it is to escape the worst of the malaise set to descend upon the UK’s big four grocers.’
City watchdogs launched an investigation into bogus profit claims at Tesco while Sainsbury’s revealed a disastrous fall in sales .
Four of Tesco’s most senior executives, including UK managing director, Chris Bush, have been suspended .
Sainsbury’s yesterday revealed that sales were down by 2.8per cent over the last three months compared to a year ago .
The high street crisis deepened yesterday after City watchdogs launched an investigation into bogus profit claims at Tesco while Sainsbury’s revealed a disastrous fall in sales. The giants are suffering because middle income families have switched to Aldi and Lidl in what industry experts see as the biggest change in shopping habits in 30 years. The Financial Conduct Authority (FCA) is investigating allegations that Tesco executives ‘cooked the books’ to make it appear the company made £250m extra in profits. The FCA is investigating Tesco under the Financial Services Markets Act to establish whether it was guilty of issuing incorrect, false or misleading information to investors . The scandal came against the backdrop of the fact that millions of customers have switched to the thriving budget chains. This same threat is turning the screw on Sainsbury’s, which yesterday revealed that sales were down by 2.8per cent over the last three months compared to a year ago. The FCA is investigating Tesco under the Financial Services Markets Act to establish whether it was guilty of issuing incorrect, false or misleading information to investors. Four of the company’s most senior executives, including UK managing director, Chris Bush, have been suspended pending the outcome of an investigation that is likely to take more than six months. Last month, Tesco told the City that profits for the six months to August 23 were about £1.1bn, however this was not correct and the real figure was some £250million lower . The City watchdog has the power to demand the company hands over documents and emails, while executives can be compelled to take part in interviews to explain their actions. Last month, Tesco told the City that profits for the six months to August 23 were about £1.1bn, however this was not correct and the real figure was some £250million lower. Tesco launched its own inquiry involving outside accountants and lawyers, however the FCA has decided the situation is so serious that it needs to investigate. If it finds evidence of wrong-doing, penalties range from public censure through to large fines for the company and individuals. In a worst case scenario, it is possible executives might be guilty of market abuse which could, in theory, lead to a prosecution for criminal misconduct and a jail sentence. All of the ‘big four’ supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – have come under fierce pressure from the budget chains. At the same time, families are buying less food and they have turned away from using big hypermarkets in favour of making smaller, more regular purchases from convenience stores. The established chains have been dragged into a price war to try and keep customers happy, but this is decimating their profits. The Tesco scandal has wiped more than £3billion off the company’s share value in the last ten days, while the shares in other grocers have also suffered. The new chief executive of Sainsbury’s Mike Coupe said food shopping is undergoing its biggest change in the 30 years he has been in the industry. The company has responded by slashing up to 5p a litre off the price of fuel in order to get people through the door. It has also introduced a new promise to ‘Brand Match’ the lower prices charged by Asda. The same store sales at Sainsbury’s for the three months to September 27 were down 2.8per cent on the same period last year. Looking ahead, it fears sales over the crucial Christmas period to be down on a year ago. Mr Couple explained the fall, saying: ‘The market remains dynamic and fiercely competitive. The long-running trend of more frequent, convenient shopping has accelerated, resulting in smaller basket sizes. ‘Our performance has been impacted by the accelerated pace of change in the grocery market, including significant pricing activity.’ Julie Palmer, retail expert at Begbies Traynor, offered a grim assessment, saying: ‘The supermarket price war has taken its toll on Sainsbury’s whose fantastic run of growth over nine years under former CEO Justin King has come to an abrupt end. ‘Performance over the last quarter has been very weak and the pressure is now on Mike Coupe to reassure shareholders that they are not sleepwalking into a Tesco-like crisis. 'Sainsbury’s will need to pull out all the stops over the next few months if it is to escape the worst of the malaise set to descend upon the UK’s big four grocers’ ‘The announcement to cut 5p off fuel and simplifying it’s ‘Brand Match’ offer will do little to mask the disappointing figures. ‘With the all-important Christmas trading season approaching, it will be interesting to see if this strategy of lowering prices on thousands of its products will be enough to deter competition from the likes of Aldi and Lidl who seem to have the most attractive offering to shoppers looking for value.’ Analyst at Planet Retail, David Gray, said: ‘These results mark a watershed moment for both Sainsbury’s and the wider UK grocery industry. The sharp decline in like-for-like and total sales at the retailer will send shockwaves across the market. ‘First it was Tesco, then Morrisons, and now even Sainsbury’s is reeling from the effects of seismic structural changes rumbling across the UK food sector. No-one is immune to the effects and there is no hiding place.’ He added: ‘No gaping holes in the company accounts and a slightly less diabolical performance than Tesco are hardly achievements to shout about. Sainsbury’s will need to pull out all the stops over the next few months if it is to escape the worst of the malaise set to descend upon the UK’s big four grocers.’
City watchdogs launched an investigation into bogus profit claims at Tesco while Sainsbury’s revealed a disastrous fall in sales. The giants revealed that sales were down by 2.8per cent over the last three months compared to a year ago. The most senior executives, including UK managing director, Chris Bush, have been suspended pending