Shares in Tesco fell for a second day in a row as the supermarket revealed a further three executives have been suspended, bringing the total number of people suspended to eight in the wake of its profit overstatement.
Shares fell more than two per cent at its lowest this morning on yesterday's close of 180.60 pence per share, recovering slightly at pixel time to 178.70 per share.
It follows yesterday's one per cent drop as investors reacted to the news of two executives resigning from the supermarket in the wake of its profit overestimate.
This week's dip follows gains made last week when the supermarket appeared to be recovering slightly after weeks of decline. Investors had been buoyed by the hiring of two new board members.
Tesco shares have fallen almost 20 per cent on its pre-profit warning price. It ended last week closing at 185.25 pence per share, compared to the week before when it ended the week at 172.15- its lowest close in at least a year.
It remains to be seen whether things level off until Tesco reports its interim results and an update on the progress of its investigation into the accounting error. The suspension of three further staff today will may signal not.
Analysts are still wary of what may be revealed next Thursday, particularly ahead of the all-important Christmas period.
Cantor Fitzgerald’s Mike Dennis says there is a risk of "a wider investigation and legal action, with the consequence of further reputational and financial risk to Tesco’s profitability and brand equity."
The forensic investigation could, in our view, create operational paralysis for Tesco ahead of the very busy Christmas build up. We believe the investigation requires all commercial department personnel to hand over communication systems (laptops) to be interrogated and all supplier meetings to be postponed then, we believe Tesco’s ability to operate could be compromised at a critical period ahead of the start of the build up to Christmas trading.
Update: This article amended that Mike Dennis is from Cantor Fitzgerald, not Shore Capital as originally stated.