Tesco self service checkout

Tesco’s self-service checkouts are currently treating customers to a festive “ho, ho, ho”, but Christmas is shaping up to be far from a laughing matter for the beleaguered market leader.

Tesco is now more than a year on from its disastrous profits overstatement that saw former CEO Philip Clarke ushered out of the door, but its share price has fallen even lower than during those dark days. This week, Tesco shares dropped as low as 150.2p by Thursday morning. The represents the shares’ lowest level since 1997. When Clarke took over from Sir Terry Leahy in March 2011, the shares were at more than 400p.

The supermarket’s trading momentum was hit by two downgrades during the week. On Monday, the shares were driven down after Exane BNP Paribas slashed its target price on Tesco by 15% to 195p (despite retaining its “outperform” rating) and a downgrade to “equal weight” with a 160p price target by Morgan Stanley.

Exane issued a gloomy outlook for all three listed grocers, predicting “carve-ups and disposals/closures”, with Morrisons the “prime candidate”. Morgan Stanley said: “We have been buyers of Tesco shares for the restructuring potential and the portfolio optimisation story. With the latter being on hold and headwinds in the UK sector offsetting self-help opportunities at Tesco, we think valuation is fair today.”

In the wake of its FTSE 100 ejection, Morrisons also suffered, dropping 4.5% over the week to 141p by Thursday lunchtime after setting a new annual low of 140.3p on Wednesday. Morrisons is now down 22.3% so far this year, while Tesco has plunged by 20.1%. Sainsbury’s has fared ­significantly better, only losing 1.3% of its value this week to 241.9p and just 2% down in 2015.

Elsewhere, shares at Imperial Leather maker PZ Cussons slumped by 5% to 290.4p on Thursday morning after the group said operating profits for the half-year to November 30 were flat and it warned on the continuing drag that challenges in Nigeria, its biggest market, would have on earnings in the second half of the year.