The crisis at Tesco deepened again today when yet another huge profit warning sent shares in the supermarket giant crashing more than 10 per cent.
About £1.6 billion was slashed from the value of Britain’s biggest retailer after its embattled chief executive Dave Lewis admitted trading profits for the current financial year will “not exceed” £1.4 billion.
This is far below the £1.8 to £2.2 billion range pencilled in by City analysts and compares with the £3.3 billion recorded last year. It will be the smallest annual profit made by the company since 2003.
The latest bombshell was Tesco’s third profit warning in recent months and came on Mr Lewis’s 100th day in charge of the company.
It comes during another torrid month for the company once known as “Tescopoly” because of its remorseless growth at the expense of rival grocers.
Last week it emerged that Tesco’s website has been struggling to cope with the number of orders placed on Black Friday, when “mini-riots” broke out in some stores. Angry customers complained of long delays on click-and-collect orders or missing out completely.
Mr Lewis has endured a baptism of fire since taking over the reins of Tesco from Philip Clarke on 1 September. Just three weeks later the former Unilever boss suspended four senior executives as he revealed that profits had been overstated by £250 million.
Today Mr Lewis said new accounting policies have been adopted and would “ensure that revenue recognition is transparent and appropriate”.
In addition there has been a major retraining programme, more than 6,000 new workers in store and price reductions. A more detailed announcement about Tesco’s future plans is scheduled for 8 January.
Julie Palmer, partner at corporate recovery firm Begbies Traynor, said: “Another day, another profit warning from Tesco. Just as it has been cutting prices in a bid to compete in the ongoing supermarkets price war, the UK’s largest food retailer today surprised the market by slashing its profit forecasts for the full year by nearly £500 million compared to analyst expectations. ”
