Sector movers: Supermarkets decline as Tesco angers shareholders

25th Nov 2014 14:35

The supermarket sector was under pressure on Tuesday as Tesco felt the heat from its indignant shareholders in response to a recent accounting scandal that left a £263m black hole in its accounts.Tesco's shares were down 2.1% at 189.25p in afternoon trade after a law firm claimed that shareholders are entitled to compensation for losses caused by the overstating of earnings.Current and former shareholders who acquired at least 10,000 shares between April 2013 and October 2014 are eligible to participate in the proposed action, according to litigation firm Bentham Europe, which is funding the court case.Tesco is currently being investigated by the Serious Fraud Office (SFO) after exaggerating its profits last month, but the firm preparing the legal case, Stewarts Law, said it would not wait until for the outcome of the probe "which may take some years".John Walker, the managing director of Bentham Europe, claimed that the overstatement of earnings "caused significant harm to Tesco shareholders who bought shares since 17 April 2013.""This is the biggest crisis in Tesco's history and shareholders - who saw billions wiped off the value of the company within days - deserve more than just an explanation for what went wrong," he said.Grocery rivals J Sainsbury and Wm Morrison were also under the weather on Tuesday, down 4.3% and 2.1% respectively.Stocks weren't helped by comments from broker Cantor Fitzgerald which said that current commodity deflation is "undermin[ing] the food retail sector".Analysts Freddie George and Mike Dennis also said they were concerned that the majority of grocery stores are "fighting over customers in regions with falling sales".They said: "The risk going forward in 2015 is that Tesco shortens its supplier payment days and invests cost savings in commodity pricing to drive customer footfall and rebuild loyalty." Top performing sectors so far todayIndustrial Metals & Mining 1,602.86 +3.89%Fixed Line Telecommunications 4,557.95 +1.48%Food Producers & Processors 8,040.06 +1.43%Construction & Materials 3,919.00 +1.41%Financial Services 8,382.96 +1.39%Bottom performing sectors so far todayFood & Drug Retailers 2,755.14 -2.30%Oil Equipment, Services & Distribution 19,902.68 -1.48%Forestry & Paper 11,600.75 -0.74%Mining 15,353.82 -0.53%Oil & Gas Producers 7,752.86 -0.51%