Mortgage Rate Rises

[dowie]

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Yes, I'm sure looking at two products in a single store on one day gives a full picture... if only there were some way of looking at the bigger picture, perhaps seeing some sort of total profit and see how much they sold across the stores and maybe compare it to previous years... oh wait.

Five Year Record

www.tescoplc.com

Yup, sales are up but profit is down... as per the reporting.

 

[Jono8]

To be fair, build a couple of new stores, refurbish a few older ones, launch a new product line or two and that's going to make your profit look worse. We regularly do such things at work to minimise our tax burden and increase future resilience.
My dad had a record year with his business last year yet made a loss. Why? Because he bought a load of assets.

Their profits were down due to this:

"Tesco’s profits were also hit by a £982m write – down on the value of properties and the £138m cost of restructuring"

 

[Dis86]

Their profits were down due to this:

"Tesco’s profits were also hit by a £982m write – down on the value of properties and the £138m cost of restructuring"

There we go!

 

[Jono8]

Basically yes, hard as it is to say.

Wage growth means costs have to go up which in the end means higher prices to even out the higher wages

...but he earns £585,000, and his deputies all earn about £350,000. Each MP earns £87,000 etc etc . The prime minister earns £160,000 in spite of being worth hundreds of millions of pounds.

The government employees sure seem to have a lot of spare cash to spend on things.....

Has he thought that maybe the problem is that there are two many rich people, paid too much money? No, of course not.

It is ridiculous to tell people that they shouldn't be allowed to earn more, whilst earning such absurd amounts of money yourself.

 

[Richie]

Yes, I'm sure looking at two products in a single store on one day gives a full picture... if only there were some way of looking at the bigger picture, perhaps seeing some sort of total profit and see how much they sold across the stores and maybe compare it to previous years... oh wait.

Five Year Record

www.tescoplc.com

Yup, sales are up but profit is down... as per the reporting.

Their profits were down due to this:

"Tesco’s profits were also hit by a £982m write – down on the value of properties and the £138m cost of restructuring"

@dowie - wanna come in on this one?

If their profits "halved to £753m" then, back of fag packet calculations indicate that it's down by that same amount (£753m). Given their write-down and restructuring cost comes to £1.1b, what does that say about their product profits?

£1.1b - £753m = £362m extra from somewhere?

 

[Jono8]

@dowie - wanna come in on this one?

If their profits "halved to £753m" then, back of fag packet calculations indicate that it's down by that same amount (£753m). Given their write-down and restructuring cost comes to £1.1b, what does that say about their product profits?

£1.1b - £753m = £362m extra from somewhere?

Five Year Record

www.tescoplc.com

From this, page, they actually made roughly as much profit as 2022, and much more than 2021

 

[Mercenary Keyboard Warrior]

To be fair, build a couple of new stores, refurbish a few older ones, launch a new product line or two and that's going to make your profit look worse. We regularly do such things at work to minimise our tax burden and increase future resilience.
My dad had a record year with his business last year yet made a loss. Why? Because he bought a load of assets.

Unless Tesco have started accounting as a small business then sorry but thats nonsense.
I assume your Dads business is a one man band.
Although some sectors will see 100% first year (or even more) writing down allowances to promote investment so its not a given.

Tesco however will not be, but the asset value from a store refit will be treated as an asset and amortised over the life of that refit. Hence only marginal impact on profits in the year.

Their profits were down due to this:

"Tesco’s profits were also hit by a £982m write – down on the value of properties and the £138m cost of restructuring"

This is pretty normal for very large businesses, most years something will need fixing. And require restating.
Its just how it works.

Underlines that "building a couple of new stores or doing a refit" isn't affecting the profit in a single year however.

Tesco make around 4% profit. Thats far from great.

I cant find upto date data quickly, but revenue and profit per employee are important metrics. They show how well a business is able to cope with changes in for example wages!
Tesco are bad, like most retail.
Look how far they are down the list, also consider their people are typically not well paid.

Top 100 UK Companies Ranked By Profit & Revenue Per Employee

The UK's most profitable FTSE 100 company is little known 3i (private equity and venture capital) which generates a staggering £5,206,406 ($6,858,685 USD) of profit per employee. The Oil & Gas industry generates the highest revenue per employee at £3,733,442 ($4,918,268 USD). However, Real...

merchantmachine.co.uk

 

[Uther]

Those poor supermarkets, must be so tough for them

 

[Dis86]

Unless Tesco have started accounting as a small business then sorry but thats nonsense.
I assume your Dads business is a one man band.
Although some sectors will see 100% first year (or even more) writing down allowances to promote investment so its not a given.

Tesco however will not be, but the asset value from a store refit will be treated as an asset and amortised over the life of that refit. Hence only marginal impact on profits in the year.


This is pretty normal for very large businesses, most years something will need fixing. And require restating.
Its just how it works.

Underlines that "building a couple of new stores or doing a refit" isn't affecting the profit in a single year however.

Tesco make around 4% profit. Thats far from great.

I cant find upto date data quickly, but revenue and profit per employee are important metrics. They show how well a business is able to cope with changes in for example wages!
Tesco are bad, like most retail.
Look how far they are down the list, also consider their people are typically not well paid.

Top 100 UK Companies Ranked By Profit & Revenue Per Employee

The UK's most profitable FTSE 100 company is little known 3i (private equity and venture capital) which generates a staggering £5,206,406 ($6,858,685 USD) of profit per employee. The Oil & Gas industry generates the highest revenue per employee at £3,733,442 ($4,918,268 USD). However, Real...

merchantmachine.co.uk

Except that's literally what they did as per jonos post.

 

[Mercenary Keyboard Warrior]

Except that's literally what they did as per jonos post.

No they didn't.
Your confused by the terminology.

Write down of property values means the assets were market value less than they were "book worth" and had to be charged to the P&L.
Restructuring is normally costs of things such as closing a location, sacking loads of staff etc

 

[Dis86]

No they didn't.
Your confused by the terminology.

Write down of property values means the assets were less than they were worth and had to be charged to the P&L.
Restructuring is normally costs of things such as closing a location, sacking loads of staff etc

No, the point was that you can include significant infrastructure/business changes as a cost to 'reduce' profit. You're incredibly naive if you don't think these decisions are made intentionally and in certain years to have desired effects. If tesco chose to then they can write the cost of a new store off in one year, not over say twenty.
They will do what they want, when they want (generally within the law) to make their figures look favourable to them either to appease shareholders or to present a media friendly point of view.

 

[MichaelAwkward]

No, the point was that you can include significant infrastructure/business changes as a cost to 'reduce' profit. You're incredibly naive if you don't think these decisions are made intentionally and in certain years to have desired effects. If tesco chose to then they can write the cost of a new store off in one year, not over say twenty.
They will do what they want, when they want (generally within the law) to make their figures look favourable to them either to appease shareholders or to present a media friendly point of view.

They would need a very good reason to fully expense a store - the auditors would have a field day. Businesses can't just apply accounting techniques however they like, there are standards - particularly when it comes to material assets like that.

 

[Jono8]

Also from the Tesco article

"Announcing a £516m end-of-year dividend for shareholders, compared with a £588m payout the year before, Murphy said: “I feel very comfortable with what we are doing for shareholders as it is balanced relative to other stakeholders we have responsibility to look after.”

So, the common person isn't allowed to want higher wages, but hundreds of millions in profits from ever increasing food rises being paid out to shareholders (many of which are no doubt already extremely wealthy) is fine....

Maybe the BoE governor should look into limiting the wealth and earnings of the already wealthy rather, than suppressing the wages of the average worker for decades...

 

[Dis86]

They would need a very good reason to fully expense a store - the auditors would have a field day. Businesses can't just apply accounting techniques however they like, there are standards - particularly when it comes to material assets like that.

Hence why I said within the law. And you have a very high opinion of auditors! In my experience they're generally inept.

 

[MichaelAwkward]

Also from the Tesco article

"Announcing a £516m end-of-year dividend for shareholders, compared with a £588m payout the year before, Murphy said: “I feel very comfortable with what we are doing for shareholders as it is balanced relative to other stakeholders we have responsibility to look after.”

So, the common person isn't allowed to want higher wages, but hundreds of millions in profits from ever increasing food rises being paid out to shareholders (many of which are no doubt already extremely wealthy) is fine....

Maybe the BoE governor should look into limiting the wealth and earnings of the already wealthy rather, than suppressing the wages of the average worker for decades...

I'm willing to bet some money that the vast majority of Tesco shareholders (in aggregate) are not extremely wealthy, considering their biggest shareholders are the following companies:

BlackRock
FIL Investment Advisors
Artemis Investment Management
Schroder Investment Management
The Vanguard Group
Norges Bank Investment Management
etc.

i.e. the funds making up our pensions.

 

[MichaelAwkward]

Hence why I said within the law. And you have a very high opinion of auditors! In my experience they're generally inept.

I really don't have that high of an opinion of auditors, but even they would question something like that going on.

 

[adam cool dude]

I'm willing to bet some money that the vast majority of Tesco shareholders (in aggregate) are not extremely wealthy, considering their biggest shareholders are the following companies:

BlackRock
FIL Investment Advisors
Artemis Investment Management
Schroder Investment Management
The Vanguard Group
Norges Bank Investment Management
etc.

i.e. the funds making up our pensions.

You mean the funds making up boomers pensions.

 

[EvilRob]

Maybe the BoE governor should look into limiting the wealth and earnings of the already wealthy rather, than suppressing the wages of the average worker for decades...

Lol

 

[Mercenary Keyboard Warrior]

No, the point was that you can include significant infrastructure/business changes as a cost to 'reduce' profit. You're incredibly naive if you don't think these decisions are made intentionally and in certain years to have desired effects. If tesco chose to then they can write the cost of a new store off in one year, not over say twenty.
They will do what they want, when they want (generally within the law) to make their figures look favourable to them either to appease shareholders or to present a media friendly point of view.

Lol
No they cant.

Businesses of any size do not simply change policy and book things on a whim.

As I said above its very normal for things to need restatement now.

Years ago auditors would only look at some parts of the balance sheet. They would ignore items that would increase profit if not there. IE they were only really concerned with things that artifically increased profit. This is by far the normal things that companies would try to do, and is basically exclusively why things like SOX controls came into existence. Companies trying to overstate their results.
Now they look at everything and if there are items they don't like that would affect profit in either direction they will press for them to be unwound.

The vast majority of companies will have documented processes and deviation from that is significantly reviewed. Its the most obvious way of trying to manipulate the result.
Significant changes in accounting will also usually see prior years restated when published account are out. So that comparative numbers are clear.

I mean its literally my profession, I know exactly how it works.

 

[MichaelAwkward]

You mean the funds making up boomers pensions.

Actually no - boomers pensions won't be in equity now at their ages...