Tesco cuts profit forecast
The supermarket has also slashed its half year dividend by 75% to 1.16p per share.
In a statement Tesco said: “The business continues to face a number of uncertainties, including market conditions and the pace at which benefits from the investments we are making flow through in the second half and consequently the board has revised its outlook for the full year. We now expect trading profit for 2014/15 to be in the range of £2.4 billion to £2.5 billion. Trading profit for the six months ending 23 August 2014 is expected to be in the region of £1.1 billion.”
The supermarket also revealed that the start date for new chief executive Dave Lewis has been brought forward to 1 September, a month earlier than planned, and that Lewis will be reviewing all aspects of the group “to improve its competitive position and deliver attractive, sustainable returns for shareholders”.
In addition, Tesco said it is planning to cut costs in a number of areas including IT and its store refresh programme. For the current financial year capital expenditure will now be no more than £2.1 billion, some £0.4 billion less than originally planned, and a reduction of £0.6 billion from the previous financial year.
Tesco chairman Sir Richard Broadbent said: "The board’s priority is to improve the performance of the group. We have taken prudent and decisive action solely to that end. Our new chief executive, Dave Lewis, will now be joining the business on Monday and will be reviewing every aspect of the group’s operations. This will include consideration of all options that create value for customers and shareholders.
"The actions announced today regarding capital expenditure and, in particular, dividends have not been taken lightly. They are considered steps which enable us to retain a strong financial position and strategic optionality."
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