Photo Credit: Gordon Joly
Hayley Daen, Young London News
Tesco announced that its trading profit for the financial year ending in February of 2015 would not exceed £1.4 billion, falling short of the predicted £1.8 billion to £2.2. Subsequently, shares fell 10.25% to £168.10.
Chris Griffith, head of Investor Relations for Tesco, said on the phone, “We haven’t given any guidance on the 2015-2016 financial year and won’t until January 8th. We are trying to create a constructive, productive way of working with suppliers that will hopefully make our fluid income more stable.” It remains to be seen how the company restructuring and falling profit margins will affect investors in the coming year.
Tesco said that the drop in expected trading profit is due, in part, to restructuring. The company plans to enhance their customer offer, increasing product availability and expanding service with 6,000 new employees.
The fall in shares and profit predictions followed Tesco’s £263 million misstatement of profits earlier this year. Dave Lewis, CEO said that although the steps they are taking to create sustainable value “are impacting short-term profitability, they are essential to restoring the health of our business.”
Tesco is not alone in falling stock prices. Morrison Supermarkets is down 4.38% to £176.80, and Sainsbury is down 3.56% to £227.40. Despite the falls in share prices, both Morrison Supermarkets and Sainsbury are trading higher than Tesco.
Tesco remains under investigation by the Serious Fraud Office for its accounting irregularities.