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Tesco warning over full year profits after difficult year

Struggling supermarket chain Tesco has admitted that its full year profits will be substantially lower than expected.

It stated that its group trading profit would not be higher than £1.4 billion, decidedly below the £1.8 billion to £2.2 billion range expected by markets.

In their interim results on 23 October Tesco highlighted that full year profitability would be impacted and that the overstatement of its profits, by £263 million would affect second half results.

Tesco had been doing deals with suppliers over promotions, but it seems Tesco had been booking returns from those promotions too early, while pushing back the costs.

The Serious Fraud Office (SFO) is currently carrying out a criminal investigation into the accounting irregularities.

The incident caused shares in Tesco to plunge in September, wiping billions off the value of Britain’s biggest supermarket chain.

The firm said that despite this, they had 6,000 new colleagues in store, increased product availability on key lines and invested in price and that “the early feedback from customers is encouraging.”

Dave Lewis, CEO said: “Tesco is focused, and will continue to focus, on doing the right thing for customers. This means running our business in a way that everything we do creates sustainable value.

“Whilst the steps we are taking to achieve this are impacting short-term profitability, they are essential to restoring the health of our business. We will not engage in short term actions that compromise in any way our offer for customers.

“We still have much to do but are making good progress in developing our plans to improve the long-term positioning of the Group and I will share more of that on the 8th January.

“Our priorities remain restoring competitiveness in the UK, protecting and strengthening the balance sheet and rebuilding trust and transparency. For now, all the Tesco team is focused on delivering the best Christmas for customers.”

This was posted in Bdaily's Members' News section by Clare Burnett .