Major Tesco Shareholder Warns On Strategy
As Tesco's new chief executive starts work on reviving the chain's fortunes it has been revealed that a major shareholder has criticised its strategy.
Harris Associates, which held 3% of Tesco stock, told newspapers it had halved its investment over the past three months.
The US fund manager's chief executive, David Herro, hit out at what he described as "unclear management direction and incoherent strategy".
He said it was prudent to cut its exposure to Tesco as both its chief executive and chief financial officer would be new in their posts.
The publication of Mr Herro's email coincided with the first day in the chief executive's chair for Dave Lewis, whose start date was brought forward by a month to September 1 following the sacking of Tesco veteran Philip Clarke, who presided over a 41% decline in the company's share price.
The development was revealed on Friday as Tesco shocked investors by issuing a third profit warning for the year and confirmed its interim dividend would be slashed by 75% to 1.16p-per share.
The supermarket chain, which has seen its position as the UK's market leader slowly eroded amid a price war with rivals, said Mr Lewis would review all aspects of the business.
Tesco shares, which lost 7% of their value on Friday, fell a further 1.9% in early trading on the FTSE 100 on Monday while rivals Sainsbury's and Morrisons also continued to suffer with the latter the biggest faller on the index.
The problems at Tesco underline a big challenge for the so-called 'Big Four' chains from hard discounters.
According to industry figures by Kantar Worldpanel released last week, Tesco sales declined 4% in the 12 weeks to August 17 compared to the same period last year.
Kantar estimated the drop in sales cost Tesco £300m.
Morrisons has also been suffering in the battle with Aldi and Lidl, with Asda the only member of the Big Four to be growing its share.
Analysts have speculated that the savings Tesco is planning could allow it to cut its prices further to tackle the discount threat.