Tesco shares drop due to profit scares

CC: Gordon Joly/Flickr

CC: Gordon Joly/Flickr

Shares in Tesco have reached an 11-year low after they predicted a drastic cut in their full-year profit.

The supermarket giant said that the “challenging trading conditions” were affecting their financial performance and were a reason behind the forecasted profit fall from £2.8bn to £2.4bn. Pressure from competitors Lidl and Aldi have seen Tesco losing market share and sales have been dwindling.

Tesco has seen a decrease of 31% in shares so far in 2015 and down 41% since Terry Leahy, the former chief executive, left the firm. The drop in profits sees the new chief executive, Dave Lewis, beginning work on Monday.

In a bid to revive Tesco, significant cuts have been made. £400m has been slashed from spending on the business which will effect their IT and store refurbishment. The half-year dividend has also seen a 75% cut, predicted to save Tesco £600m.

“The Board’s priority is to improve the performance of the Group. We have taken prudent and decisive action solely to that end.

“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,” said chairman Sir Richard Broadbent.

 

Tesco Investors Page

 

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