The largest retailer in the U.K., Tesco Plc, announced that it expects its annual earnings will equal almost the half of those projected in August. This downward revision of the companys profit forecast comes at a moment, when Tesco has been trying to turn its business around after revealing an overstated profit.
The projection is considered as the first indication of how Tescos earnings are to be affected by its attempts to bring a new life to its sales. The Chief Executive Officer of the company, Dave Lewis, has been trying to reduce prices, improve product availability, attract more customers as well as add new employees.
The CEO Lewis said in a statement, cited by Bloomberg: “Our priorities remain restoring competitiveness in the U.K., protecting and strengthening the balance sheet and rebuilding trust and transparency.” As reported by the Financial Times, Mr. Lewis also added: “For now, all the Tesco team is focused on delivering the best Christmas for customers.”
According to Tesco, its annual trading profit is not expected to surpass £1.4 billion ($2.2 billion). In comparison, in August this year the retailer posted a profit forecast within the range of £2.4-2.5 billion. Only a month later, the company announced a £263-million profit overstatement.
The shares of the company, which is also the third-largest retailer in the world, declined 17% to a 14-year low today, due to the issued profit warning, which is about 30% lower than the initial analysts projection of £1.94 billion.
Bruno Monteyne, an analyst at Bernstein, commented on Tescos announcement, saying that the next fiscal year is likely to be difficult for the retailer in terms of profit, as the company is dealing with the most severe crisis in its entire history.
Mr. Monteyne said for Reuters: “This is bringing the account cleansing and a bit of the investment forward.”
Tesco Plc lost 9.74% to trade at GBX 169.05 per share as of 14:00 GMT, marking a one-year loss of 49.33%. The company is valued at GBP 15.21 billion.
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