At times it looked like the Tesco (LSE: TSCO) share price might keep falling forever, but finally the plunge has come to a halt.
And about time too, with the stock down 20% in a month, to todays price of 185p.
After all the profit warnings, accounting shocks, customer grumbles, supplier complaints and Warren Buffett regrets, what is still the UKs biggest retailer has finally had some respite.
Perhaps this will only be a temporary reprieve, a dead supermarket bounce, but it feels like more than that. This could be the start of the fightback.
First, theres a new man at the helm, Dave Lewis, and he has made the right moves so far. It was easy for him to expose the scandal of the missing 250 million, he couldnt be blamed, but he has moved swiftly and brutally, suspending five executives so far.
Nor can Lewis be blamed for ordering that $50 million Gulfstream 550 Jet, a symbol of corporate hubris if ever Ive seen one. It was an easy decision to instantly offload it, plus Tescos four other jets.
The fact that Tesco even had a fleet of corporate jets says everything. The wrongheaded arrogance revives uncomfortable memories of Royal Bank of Scotland Group under Sir Fred Goodwin.
Found His Compass
When a major FTSE 100-listed company falls from grace, it is a long road back to respectability (as RBS is showing). But Tesco isnt quite such a basket case.
Customers are cynical about the Tesco shopping experience, but they can be soothed by the right strategy. Just look how quickly Ryanair has been rewarded byits image overhaul.
While kicking out directors, Lewis has been appointing impressive new executives, including Richard Cousins, group chief executive officer of Compass since 2006, and Mikael Ohlsson, recent chief at IKEA Group.
That should help persuade the market that governance at Tesco is set to improve.
Dead Ket Bounce
Tescos fightback has been given a welcome boost by HSBCs recent upgrade, which reported an improving risk profile, although to be fair, it could hardly get worse.
HSBC analyst David McCarthy said: We expect further bad news on accounting, pensions and a re-basing of profits, but believe much of this is now in the price.
New senior appointments, probably including a new chairman, will no doubt help. HSBC has lifted its target price from 175p to 195p, while warning of pain ahead.
Only The Brave
Trading at just 5.7 times earnings, Tesco now looks hard to resist. I sold a year or so ago at 335p, and Im tempted to dip back in. But theres no doubt it has a fight on its hands, as consumer shopping habits change, wages stagnate, German discounters advance, the web kills the high street, and the big weekly shop is consigned to the past.
There will be more misery ahead, especially if the next set of figures disappoint, and the recent dividend butchering gives investors little compensation from that quarter.
But if you want to get in before thefightback, rather than afterwards, now is the time.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of Tesco. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.