As a result, Shore Capital analyst Darren Shirley renewed calls for a significant management restructure of the retailer.
“We have now lost count of the number of times that we have downgraded our forecasts for Tesco over the last three years,” said Shirley. “Whilst so, we have another announcement today (August 29) that represents the inverse of whatever the icing on the cake stands for.”
“Following ongoing poor trade, reflected in the recent Kantar data, which showed that Tesco was under-performing the UK grocery market by over 5% in the 12 weeks to August 18, the group has informed the market of a further re-base in expectations, down further from that announced in the July 21 warning when it announced the appointment of Dave Lewis from Unilever.
“We are pleased that the appointment of Mr Lewis has now been brought forward to September 1.” Clarke was to have left Tesco in October, telling BBC Radio 4’s Today programme in April: “I intend to be here to see this through.
“We are in the middle of key changes and I will lead my team through to make it better for customers.”
Shirley said Tesco’s latest update raised questions about the capability of the management under Clarke “at this once great company”.
‘Senior management change’
“As such, we expect, as part of a range of measures, there to be considerable senior management change under Mr. Lewis in time, as Tesco needs a world class top team to take it forward.”
In a trading update issued today, Tesco downgraded trading profit for 2014/15 to be in the range of £2.4bn to £2.5bn. Trading profit for the six months ending August 23 was expected to be in the region of £1.1bn, it said.
In addition, the UK’s top supermarket chain said it would slash capital expenditure to “no more than £2.1bn”, £400M less than originally planned and a reduction of £600M from the previous financial year. “This will be achieved in a number of areas including IT and the slower roll-out of our store refresh programme,” it said.
“The board's priority is to improve the performance of the group,” said Tesco chairman Richard Broadbent in the retailer’s statement. “We have taken prudent and decisive action solely to that end.”