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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.
Maybe Tesco can look at the Yo Yo pricing they do daily. People are sick of getting ripped off. They have themselves to blame. Treasure Ireland have moved on.
Probably the worst company that trade here with the most disrespect for the Irish shopper.
How so?
Well they fed us horse meat for a start….. They also refused to give us a break down of their profit levels in comparison to the UK.
Aldi, Lidl and Iceland also fed us horse meat. and believe it or not all 3 of those companies also do not break down their profits by country. compare aldi & lidl’s prices between us and the uk and see the disparity so they are not the saints that people love to fawn over on this site.
Their prices were dearer here than in Britain and they refused to give details of their Irish profits
Constantly out of stock and no customer service in my local Tesco. Would be glad to see the back of them. Support Irish where possible.
They do employ just under 16,000 people in Ireland not to mention the thousands more indirect jobs. They also sell a lot of Irish produce. So they do support Irish. They also sell a lot of Irish products at Tesco stores in Britain.
What’s this Mike? Some sense being spoken? Less of that! This is the comments section don’t ya know!
I don’t like their shops and have not bought much there since Aldi and Lidl arrived but in fairness they do buy a very large volume of goods here, I did read once that they actually bought more here than they sold.
They employee 16,000 people, the majority of whom are stuck in low paid, zero hour contracts. They also screw their suppliers wherever possible because they’re so big that companies can’t afford to lose their business. When a large Tesco opens up how many small businesses close? I agree with Johnny, I’d be glad to see the back of them. Supporting companies like this makes the world a bleaker place.
The majority of whom take home less than 300 euro a week, preventing them from contributing in any significant way to the wider economy. As for selling Irish products in Britain? Yes of course they do but not the amount of British product they sell here at over 25% price hike. One man’s “sense” is anothers ruthless exploitation.
good man rocky wanting 16,000+ on the dole
Lee – before Tesco arrived there was a family owned hardware shop called O’Buchalla’s in my home town. They were there for over 100 years. They employed locals on a fair wage and bought the majority of their supplies from Ireland, not China like Tesco. There were numerous butchers who sold traceable Irish meat, veg shops who employed a similar policy and several small corner shops scattered around the town. The same thing is happening all over the country. You’re very wrong if you think I’d like 16,000 on the dole. I want a functioning society where people earn a fair wage for their work. Taking power away from the large corporations is the first step in achieving that.
Hard to be a regular shopper at a place where the prices change daily. One day you have good deals on things, the next day the highest prices in Ireland. Then next week they are back down again. Its easier to just avoid the place because you never know when you go in if you are going to get a good deal or get ripped off until you arrive.
Shop irish!!
Couldn’t happen to a nicer company.
€1.4BN profit globally and hundreds million of that is from its Irish operations.
from the wiki page
Tesco’s profit margins in the Republic are the company’s highest in the world according to retail industry analysts in London, who have a detailed knowledge of Tesco’s worldwide operations. Tesco’s Irish profit margin, was 9.3 per cent in 2008 and is projected to rise to 9.5 per cent by the end of 2009. This makes the Irish operation Tesco’s most successful worldwide in margin terms.[3] Tesco’s Irish profit margin is all the more remarkable given that the company sells a much larger volume of higher margin non-food items at its UK stores
All helped by charging Irish customers at least 20-30% more than those in Britain. But in Ireland they’re competing with the more expensive Dunnes and Supervalu. Maybe if Asda opened up in Ireland you would see big changes. Aldi and Lidl have helped but they don’t sell much branded products.
Correct Martin. Yet they continually use the “England is carrying the Irish stores” line to motivate staff. Staff that can’t get uniforms and many have to buy similar clothing out of their own pocket. Who can’t earn a viable wage because most are on a 20 hour/7 day contract, preventing access to any other part time work.
Tesco have a huge trainee manager drop out rate and are not a decent company to work for or to shop with in general.
The same can be said of Dunnes, another place that I have not been in for years.
Tesco in clondalkin is like something from a prank show. Most of the staff are atrocious and I suppose…. SIMPLE!!! it boils my blood when it’s my very last resort to go in. The shop closes at 10pm but most shutters are down and lights are off from 9pm, so unwelcoming!
It’s most people’s last resort. Horrible kips.
You reap what you sow
So why do they keep putting up new Tesco Express’s on every street corner in Dublin?
The food is vile & always out of date
They need to send their employees and management team into some of the discounters .
why?
Good. They’ve been robbing us blind for years. Shop Irish. Shop local.
most of the big retailers are robbers but to be fair to tesco not only have they huge overheads as anchor tenants ,they are also irelands biggest employer with 15000 staff. they also buy 10pc of the food produced here. dunnes and tesco combined have 29000 staff. thats alot of families who are happy with them
You can’t beat the wide selection tesco offers but i think they were the ones to bring in a finest range and also ‘ready ripe’ so in tesco u have to spend double the price for the chance of a ripe avocado with the normal avocados solid as a rock.
As an avocado lover myself, the only tip I can give you for the rock hard ones is to leave them in your hot press for a few days. It ripens them up lovely.
Not to worry profits will be back up soon enough as they cut back on useless things like stores budgets for staff wages and having unnecessary things like security guards in shops
Thank god I don’t work for tesco anymore
How much is he paying you?
Every little helps
Every Lidl helps.
Aldi the time
Think I’ll buy a few cheap Tesco shares.
Tescos price for 500gTapioca €2.49 local Spar 500g Tapioca €1.99 need I say anymore. Actually pointed this out to management 2 weeks ago.
Good time to go long on TSCO.L
Interesting,
They now think they will increase profits by hiring more staff…
This is good news for employment but doesn’t explain why they used to think they could increase profits by hiring less staff…
have your say