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Last week, Tesco cut 拢400m from its capital spending budget as the retail giant issued another profit warning, attributed to 鈥渃hallenging trading conditions鈥�.

In a statement to the City, the retail giant said it would cut its capital spending programme by 拢400m to 拢2.1bn in this financial year.

It said: 鈥淭his will be achieved in a number of areas including IT and the slower roll-out of our store refresh programme.鈥�

The announcement came as the firm said that it had cut its profit forecast for this financial year from 拢2.8bn to between 拢2.4bn and 拢2.5bn.

It said 鈥渃hallenging trading conditions鈥� and Tesco鈥檚 鈥渙ngoing investment in our customer offer鈥� had been the cause of the profit warning.

Richard Broadbent, chair of Tesco, said the decision to cut capital spending had 鈥渘ot been taken lightly鈥� and was a step to 鈥渆nable Tesco to retain a strong financial position鈥� and strategic options.

However, Tesco added that incoming chief executive Dave Lewis, who joined the retailer from consumer goods giant Unilever on 1 September, would be 鈥渞eviewing all aspects of the group鈥�.

David Gray, retail analyst at Planet Retail, said that he expected to see further capital spending cuts from the big retailers.

鈥淭he middle ground [of the retail market] is being squeezed and they don鈥檛 want to cut their margins so they have to cut their capital expenditure,鈥� he said.

He added he was 鈥渟urprised鈥� Tesco was cutting store refurbishment because he said he had seen figures that showed the chain鈥檚 refurbished stores experienced a 3-5% uplift in sales, which he said was 鈥渜uite good鈥�.

Paul Zuccherelli, partner at Alinea Consulting, said he expected further capital spending cuts from the retail giants. He said: 鈥淚 don鈥檛 think we have reached the bottom yet.鈥�

鈥淭he one that might buck that trend is Morrisons. They are one of the few winners and they are laying down space in small stores,鈥� he said.