Tesco acts as slump in profits continues
The price war raging in Britain's supermarket aisles forced Tesco into drastic action yesterday following another damaging warning over annual profits.
The ailing market leader is to slash its dividend for shareholders by 75% and has pledged an annual cut of £400m on capital spending such as store refits as it feels the heat from its third profits warning this year.
Former Unilever executive Dave Lewis will now start work as chief executive on Monday – a month earlier than planned – with the immediate task of reviewing "every aspect" of the group's operations.
Tesco shares slumped 8% at one stage to an 11-year low, with rivals Sainsbury's and Morrisons also down sharply amid fears that they are facing a costly new phase in the supermarket price war.
Analysts predict that even bigger price cuts are in the pipeline as Tesco prepares its fightback after being squeezed by the growth of Aldi and Lidl.
Profits to April are likely to be between £2.4-£2.5bn, below forecasts of around £3bn and down on the previous year's £3.3bn.