iNVEZZ.com, Thursday, November 6: Business Secretary Vince Cable has voiced his concerns over Tesco’s (LON:TSCO) treatment of suppliers, in a move which will put more pressure on the company while an investigation into the circumstances leading up to the £263 million black hole in its accounts is carried out, Sky News has revealed.
Cable is said to have written to the Groceries Code Adjudicator (GCA), Christine Tacon in recent weeks, regarding Tesco’s reputation for behaving robustly towards the companies which supply it, many of which are small or medium-sized businesses reliant on their contracts with the retailer.
The Business Secretary is also said by allies to be keen to examine whether aggressive accounting practices are connected to the way in which Tesco’s supply chain is perceived to be squeezed by it.
In his letter to the industry ombudsman, Cable is understood to have expressed support for her comprehensive review of the way Tesco deals with suppliers and whether its approach may have contributed to the shock profit overstatement. He has said that while it was important not to prejudge Tacon’s review of the matter, it would be an important exercise and closely watched by both suppliers and consumers.
Last week, the Serious Fraud Office (SFO) launched a formal criminal investigation into accounting errors at Tesco, which led to a £263 million profit error (Tesco share price: Retailer confirms SFO probe).
*h*Tesco share price rallies amid wider industry gain*h*
As of 13:50 GMT, Tesco’s stock was trading 4.15 percent higher at 183.00p. The rise came amid a wider industry increase and followed the release of Morrisons’ (LON:MRW) trading update this morning. The UK’s fourth-largest grocer announced that its sales decline had eased in the third quarter (Morrisons share price opens higher as sales decline eases in Q3).
Of the 18 analysts projecting 12 month price targets for Tesco for the Financial Times, the median target is 192.50p, with a high estimate of 325.00p and a low of 145.00p.
According to the FT, as of 25 October 2014, the consensus forecast amongst 49 polled investment analysts covering the group has it that investors should hold their position in the company.
**As of 13:55 GMT, buy Tesco shares at 182.95p.**
**As of 13:55 GMT, sell Tesco shares at 182.90p.**