LONDON: Supermarket group Tesco, Britain’s biggest retailer, said Tuesday said it expected profits to take a major hit as it refocuses the business amid a fraud investigation into its finances.
Tesco said its trading profit “will not exceed £1.4 billion” (Dh8 billion) in its financial year to February 2015. This compares with analysts’ consensus of £1.94 billion.
“Whilst the steps we are taking to achieve this [turnaround] are impacting short-term profitability, they are essential to restoring the health of our business,” Tesco chief executive Dave Lewis said in a statement on Tuesday.
British authorities recently launched a criminal investigation into Tesco after the retailer in October revealed that it had overstated its profits by #263 million as a result of accounting errors stretching back to before 2013.
Tesco is the world’s third-biggest supermarket group after France’s Carrefour and global leader and US giant Wal-Mart.
While Tesco has been forced to massively adjust its reported earnings owing to an overstatement of income and an understatement of costs, the supermarket has in any case seen profits hit in recent times by increased competition in main market Britain.
In a bid to turn around its fortunes, the group in July appointed outsider and former Unilever executive Lewis to replace long-standing chief executive Philip Clarke.
