It has been an incredibly difficult summer for Tesco.

Profit warnings in July and August, a 75 per cent cut to the interim dividend, a rushed in chief executive officer - David Lewis, ex Unilever - and an even more rushed in chief finance officer in Alan Stewart, formerly of Marks & Spencer.

Mr Lewis appears to be very well regarded and obviously extremely familiar with business strategy for branded companies.

On the other hand, having spent his working life at Unilever, he does not have any previous direct retail experience.

You will have seen the news last week that Tesco released an unexpected trading update, stating during its final preparations for the interim results, it had identified an overstatement of its expected half year profits, by some £250m.

This was principally due to the accelerated recognition of commercial income and delayed accrual of costs.

This is basically Tesco bringing income forward from future periods and delaying costs to future periods to show a profit.

As you would expect, this has prompted the new chief executive office to initiate an investigation.

The shares have lost approximately 40 per cent of their value year to date.

So what now?

The questions on investors’ minds (which unfortunately will not be answered for a few months yet) is what strategy is Mr Lewis going to implement at Tesco in order to stop the market share loss and turn around the underperforming large stores, two of the main reasons for the summer profit warnings.

Commentators disagree on the potential new strategy Mr Lewis will introduce.

What seems to be quite sure is that the results for both the first half and the full-year will be quite significantly below last year as Mr Lewis attempts to bury all bad news within his first year at the helm.

Turning Tesco around and making it a permanently stronger company will require significant investment.

Firstly, despite the price reductions implemented in some basic lines, Tesco’s products remain too expensive on a relative basis (about six per cent more expensive than Asda).

This gap in pricing is not accompanied by a gap in quality perception.

In our view, we do not think Mr Lewis will implement a strategy based exclusively on price cuts.

He may proceed with, and possibly accelerate, the revamp of stores, and improve the store experience, potentially adding staff at the checkout and on the shop floor.

We believe at some point Mr Lewis will attempt to sell some of the underperforming international operations and bolster investment in the better performing ones.

However, now is the time to focus on the UK.

Tesco finds itself in a very difficult situation: UK sales are declining; costs will be difficult to cut in order to reverse the brand perception and Mr Lewis might have to undo all the changes made by his predecessor so far (the refresh of some stores and products might not have gone far enough).

All these changes need investment and the current, still reasonably high, dividend yield is a hindrance in our view.

Cutting the final dividend is not an easy move, but Mr Lewis will be forgiven if he starts to show a significant turnaround in the business.

Tesco is no doubt taking decisive actions to address both its operational and accounting issues.

We hope the investigation will be concluded swiftly and that the issues discovered in September are the only ones affecting the company’s accounting.

All eyes will be on the results which are scheduled to be published on October 23.

Gary Welford is an assistant investment manager at Brewin Dolphin. The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin Ltd. No director, representative or employee of Brewin Dolphin Ltd accepts liability for any direct or consequential loss arising from the use of this document or its contents. Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation which is subject to change.