Tesco is parachuting in new boss
Lewis, who starts on Monday, will be "reviewing every aspect of the group's operations" to tackle a sales slump at the
More than pounds 1.3bn was wiped off Tesco's value as its shares dived nearly 7% to 230p, their lowest level in 11 years. Investors fear Lewis will escalate the supermarket price war, which has already seen Tesco invest more than pounds 200m in price cuts. Those concerns pushed down the share price of Sainsbury's and
Last month, when Tesco ousted
Tesco said yesterday that it now expected to a make a trading profit of between pounds 2.4bn and pounds 2.5bn in the year to April, down from an expected pounds 2.8bn. Last year the retailer turned in pounds 3.3bn.
The company is also cutting planned investment - mainly linked to IT spending and Clarke's store refurbishment plan - by pounds 400m, which is pounds 600m lower than last year. The half-year dividend payout is being slashed by 75% to 1.16p a share, which will save pounds 900m if repeated at the end of the year.
Together those moves will give Lewis, who left the consumer goods conglomerate
"Tesco has failed to adapt to the changes in the
Tesco is now the worst performer among the
In a tough grocery market, which is growing at the slowest pace in almost a decade,
Tesco's profits warning is seen as a clearing of the decks before Lewis's arrival. A previous profit warning, in July, led to the ousting of Clarke, who failed to stem the slide in sales and profits during his three-year tenure.
Clarke invested pounds 1bn in improving the look of stores and improving service, but allowed Tesco to become gradually more expensive than its biggest rival Asda and well ahead of the discounters.
Broadbent said: "The business continues to face a number of uncertainties, including market conditions and the pace at which benefits from the investments we are making flow through."
Market observers welcomed the early arrival of Lewis ahead of the Christmas season, but many expect Tesco's profits will take further hits, most likely in the spring, as Lewis works through his longer-term strategy for the business.
Analysts said further adjustments to profits could come as it was not clear how much Tesco's new boss will invest in price cuts, increasing the number of staff in stores or whether he will have to make redundancies at head office.
While the priority will be turning around the
Meanwhile, Tesco has investments in a number of small
Other analysts suggested Tesco needs to get rid of its Clubcard loyalty scheme or Fuelsave promotion in order to focus on cutting prices on everyday groceries.
can reverse a slump in sales
Tesco was criticised by analysts
for failing to adapt to a retail
landscape that has been changed by the arrival of low-cost supermarkets Photograph:
Most Popular Stories
- Businesses, Investors Pressing for Green Policy
- Who's Next? More Nude Celeb Pics Hacked, Leaked
- Tips for Hiding, Securing Data on Smartphones
- Cristela Gets a Big Thumbs Up
- E-scrap Recyclers Find Profits in Upgrades
- Iran Says Syria Strikes Illegal
- Lower Used-Car Prices Roil the Auto Industry
- ISIS Calls for Jihad Against 'Filthy French'
- Congress Casts a Coy Vote on ISIS War
- 'The Voice' Sounds Different This Season