The group may have benefited from Bill Ackman’s interest in its shares. The Pershing Square founder and chief executive told Bloomberg TV yesterday that he had looked at investing in Tesco, although ultimately decided to steer clear of the UK supermarket sector.
At 214p, Tesco’s share price is getting close to the level it was at before the company admitted to overstating its profits in September, when it was almost 230p. At its lowest, Tesco’s share price fell to 164.8p on 12 December, after it was revealed that under former chief executive Philip Clarke Tesco had stated its profits as being £250m more than they actually were. Recovery was impeded over the next few months as executives were suspended, market share was lost, and the overstatement was revised to closer to £263m.
However, it was not all positive news for the UK’s largest retailer yesterday. Standard & Poor’s (S&P) downgraded the firm’s credit rating to so-called “junk” status, citing the challenges building in the sector
S&P said the company was not going far enough in its plans to counter the rapid rise of the discount supermarkets, which have taken market share from Tesco and other established retailers. The ratings agency said: “We anticipate that Tesco’s profitability will continue to remain under pressure as market competition in the UK remains high.”