Profit forecast of Tesco, the world’s third largest grocer, has been slashed for the fourth time throughout the 5 recent months because its new CEO made costly measures in re-structuring the company after an accounting scandal as well as a relative loss of customers.
The British retailer’s shares dropped 17% sometime on Tuesday to its 14-year low, eliminating nearly 2.5 billion pounds off of its stock market estimate. The group also reduced its trading profit forecast for the full-year by one-third.
It forecasted its 2014-15 profit not going above 1.4 billion pounds, but below the average estimate of analysts at 1.94 billion. That was also less than its 2011-12 profit of 3.8 billion.
After 20 years of uninterrupted growth, the company has lost track as it was distracted by a costly expansion strategy overseas as it saw a need to address the rising of discount outlets, which have transformed the shopping habits of its customers. Tesco was likewise distracted by the boom of convenience stores, including online shopping resulted in its empty out-of-town stores.
Dave Lewis, Tesco’s CEO said the new valuation was relatively affected by the 500 million pounds used in reworking the company’s strategies such as supplier relationships, accounting policies, lowering prices on products, hiring of additional employees, and increasing the accessibility of the company’s popular lines.
Lewis also said the company might slash prices so as to catch up, considering some investments in order to become more competitive. Thus, Tesco’s top priorities include the restoration of its competitiveness within the United Kingdom, protection of its balance sheet, and the reconstruction of trust and transparency. Lewis reiterated that the review of its company’s international portfolio of assets is still on-going.