Updated at 2.01pm
NEARLY 15 YEARS of share gains from supermarket giant Tesco have been wiped out after the UK chain again slashed its profit forecasts.
The once-dominant retailer today announced it expected to make less than half what it took in last year.
Tesco told investors it predicted its trading profit for the full year to February would “not exceed £1.4 billion (€1.8 billion)” as it tried sinking more money into staff and stores.
The company’s share price hit a new low of £1.55 this morning after the announcement before bouncing back nearly 10%.
It has shed about two-thirds of its value since April 2010 and today’s bottom represents Tesco’s lowest share price since it plumbed similar depths in 2000.
Investors would have to look back even further – to 1997 – for a time when the Tesco share price consistently traded for less.
Last year the chain’s trading profit landed at £3.3 billion (€4.19 billion) – a figure which was already below what it took in for the same period in 2012/13.
Its forecast for this year has also been slashed since an estimate in late August when the company said it was expecting to make up to £2.5 billion (€3.18 billion).
Today, Tesco said it had “taken actions to invest in and improve (its) company offer” and it had hired more than 6,000 new staff, increased products and cut prices to win back customers.
“The early feedback from customers is encouraging,” its statement said.
Tesco under pressure
The supermarket chain has been coming under pressure as the market leader in Ireland over recent months, while in the UK, where it makes the bulk of its profits, its share of the grocery business has also been plunging.
Its existing business shrank 6.4% for the first half of 2014 in Ireland, the company’s worst-performed territory for the period.
Chief executive Dave Lewis said the company was trying to create “sustainable value” which had an impact on its short-term profits.
Our priorities remain restoring competitiveness in the UK, protecting and strengthening the balance sheet and rebuilding trust and transparency,” he said.
The company’s reputation took a big hit after it emerged in September that it had overstated its profits to the tune of £250 million – later revised up to £263 million.
The UK’s Serious Fraud Office has since launched a criminal investigation into the accounting debacle, while its chairman Sir Richard Broadbent announced he planned to stand down after the company’s latest plans were put in place.
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