Retail giant cuts capital expenditure again as it issues another profit warning
Tesco has slashed 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 this morning, the retail giant said it would cut its capital spending programme by 拢400m to 拢2.1bn in this financial year.
It said: 鈥淲e are implementing further reductions in capital expenditure.
鈥淔or the current financial year capital expenditure will now be no more than 拢2.1bn, some 拢0.4bn less than originally planned and a reduction of 拢0.6bn from the previous financial year.
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.
The profit warning is Tesco鈥檚 second in two months.
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.
It said: 鈥淭he business continues to face a number of uncertainties, including market conditions and the pace at which benefits from the investments we are making flow through in the second half and consequently the board has revised its outlook for the full year.鈥�
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 and strategic optionality鈥�.
Tesco said incoming chief executive Dave Lewis, who joins the retailer from consumer goods giant Unilever on 1 September, would be 鈥渞eviewing all aspects of the Group in order to improve its competitive position and deliver attractive, sustainable returns for shareholders鈥�.
The firm is due to report its interim results on 1 October.
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