Tesco's financial woes roll on with fifth profit warning

TESCO has announced its fifth profit warning in a year in a move that saw  its battered share price plummet another 16% to a 14-year low of 156p.

Group chief executive, Dave Lewis, who was parachuted in on 1 September, said profit for the year ending February 2015 would not exceed £1.4bn – well below market expectations, of £1.8bn to £2.2bn – over £1bn down on last year.

He said the grocer had taken on 6,000 new staff as part of its bid to arrest the dramatic decline of its fortunes.

“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,” he added. “While 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.

“Our priorities remain restoring competitiveness in the UK, protecting and strengthening the balance sheet and rebuilding trust and transparency.”

Further details of the group’s attempt to reverse the decline will be unveiled on 8 January, he said.

The news has bookended what has turned out to be a true annus horribilis for Britain’s biggest supermarket group.

Tesco is being investigated by the Serious Fraud Office over the scandal of overstating its profits by £263m. It’s previous chief executive Philip Clarke left in July when his doomed attempts to turnaround Tesco’s fortunes failed.

In August, it announced that its half-year dividend would be cut by 75% and full-year profits would be in the region of £2.4bn to £2.5bn, less than its previous estimate of £2.8bn, and already £500,000 down on last year’s £3.3bn reported profits.

However, like a chronic illness, bad news seems to keep making an appearance for the grocer. In October, it emerged that Tesco was taking delivery of a £31.3m corporate jet – a Gulfstream 550 – ordered early last year during the reign of ousted chief executive Philip Clarke.