UK’s largest retailer continues its year of woes with warning that full-year group profit is £500m less than expected
Tesco has warned that its group trading profit for the full year will not meet expectations, despite already having slashed forecasts earlier this year.
A company statement said that the figure “will not exceed £1.4 billion” for the 12 months to February 2015, already £500million below what was expected by the market.
The retailer has admitted it overstated its half-year profit forecasts by £263m, but in August, and before the accounting irregularities came to light, it had already reduced its full-year forecast from £2.8bn to £2.4bn.
Partner at business analysts Begbies Traynor, Julie Palmer, said despite Lewis’ efforts to rebuild the Tesco brand using price reductions and extra staff hours, the latest profit forecast cut implies bigger problems.
“New CEO Dave Lewis is working hard to rebuild Tesco’s brand with shoppers by investing more in price reductions, short-term promotions and extra staff hours, but today’s profit warning implies more serious woes for the company as it struggles to maintain its leading market share, with UK grocery trading losses expected in the second half of the year,” she said.
“For some time, UK consumers have been voting with their feet, preferring the combination of value and quality provided by Tesco’s smaller peers, and with today’s negative share price reaction, it seems investors too are heading for the checkout.
The news comes as it was announced that Tesco’s suspended head of Group Food Sourcing (GFS), Matt Simister, is to return to his position, while chief executive Dave Lewis will run Tesco UK on a temporary basis..