Supermarket giant Tesco (TSCO.L) surprised the market this morning after an unscheduled announcement to investors issuing another profit warning.

Tesco (TSCO.L) issued guidance of up to a 58% drop in full year profits, a much worse drop than was feared and send shares plummeting in early trading.  Tesco (TSCO.L) says profit for the year to february 2015 is not expected to exceed £1.4Bln. Down from £3.315Bln the previous year, and much less than the expectations of analysts in the range £1.8-2.2Bln.

The company said that recent measures to improve policies and procedures along with customer service would impair this years results however the company will continue to invest in improving services to customers amid falling sales. Tesco says On the 8th January they will share more detail about the measures they plan to take to improve the competitiveness of the UK customer offer and to strengthen the balance sheet.

Dave Lewis, CEO said:

Tesco (TSCO.L) 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.”

Shares in Tesco (TSCO.L) fell as low as 160p this morning and have managed to recover slightly this afternoon, currently trading at around 175p (down 6.5%)

 

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