Tesco warns on full year profit
Tesco has warned that its full year profits will be below market expectations as it revealed that it has overhauled its policies and procedures and improved the customer offer in recent weeks.
In statement issued today, the supermarket said that it does not anticipate that group trading profit for the year ending February 2015 will be more than £1.4 billion. This is below the previous forecasts of around £1.94 billion.
In its interim results on 23 October, Tesco highlighted that full year profitability would be impacted as it revisited its plans following an admission earlier this year that it had misstated its profits by £263 million.
Today the company said it had implemented new policies and procedures in recent weeks which will govern commercial income activities. It has also invested in improving the customer offer.
Tesco said: “Our new commercial approach will underpin stronger long-term relationships with our suppliers, benefiting customers, whilst at the same time ensuring that revenue recognition is transparent and appropriate. We have retrained our entire team and begun the cascade with our suppliers.
“In addition, we have invested further in service, with more than 6,000 new colleagues in store, increased product availability on key lines and invested in price – all aimed at enhancing our customer offer. The early feedback from customers is encouraging.”
Tesco said it will give more details on 8 January about its plans to improve the competitiveness of its UK customer offer and to strengthen the balance sheet.
Dave Lewis, Tesco chief executive, added: “Tesco is focused, and will continue to focus, on doing the right thing for customers. This means running our business in a way that everything we do creates sustainable value. Whilst the steps we are taking to achieve this are impacting short-term profitability, they are essential to restoring the health of our business. We will not engage in short term actions that compromise in any way our offer for customers.
“We still have much to do but are making good progress in developing our plans to improve the long-term positioning of the group and I will share more of that on the 8th January. Our priorities remain restoring competitiveness in the UK, protecting and strengthening the balance sheet and rebuilding trust and transparency. For now, all the Tesco team is focused on delivering the best Christmas for customers.”
