Tesco’s accounting methods in spolight
TESCO yesterday saw its shares dip after Citigroup accused it of “consistently aggressive” accounting.
Britain’s biggest grocery chain is using a different method from its rivals on everything from depreciation to pensions, an analyst claimed.
Citigroup’s Alastair Johnston said: “If we put Tesco on more comparable accounting to other companies in our sector, it appears to be a much less profitable entity.”
Citigroup’s alternative earnings per share for the chain, using a similar model to its peers, is 24.2p for the last financial year, as opposed to Tesco’s figure of 31.7p.
Johnston also said: “As we argue in this report, the profit and loss Tesco presents to analysts, owners and potential owners of the business is increasingly divorced from its operational realities, we think.”
In a separate report the Advertising Standards Authority found that a Tesco media campaign claiming that certain ranges were cheaper than Asda had been “ambiguous and misleading”.
Meanwhile it was also revealed yesterday that Tesco plans to sell a 30-year benchmark sterling bond backed by rents generated by a portfolio of its supermarkets. HSBC and Goldman Sachs are managing the sale and leaseback deal, which will be issued via Tesco Property Finance 3. Moody’s has estimated the market value of the portfolio at £853.1m.
Yesterday Tesco’s share price dropped 2.51 per cent to 380.05p.