Tesco PLC (ADR) (OTCMKTS:TSCDY) (LON:TSCO) warned that its full-year profit would be impacted by its actions to overhaul its business as the new management review its plans to invest and improve its customer offerings.
The UK-based supermarket giant also said the commercial income overstatement would affect its second-half results. Tesco PLC (ADR) (OTCMKTS:TSCDY) (LON:TSCO) expected to achieve not more than £1.4 billion in group trading profit for its financial year ending February 2015.
Tesco PLC (ADR) (OTCMKTS:TSCDY) (LON:TSCO) plummeted following its announcement. The company’s stock was trading $8.14 per share, down by more than 6% at the time of this writing, around 11:36 A.M. in New York.
Tesco PLC new commercial approach
According to the supermarket giant, its commercial approach will focus on stronger long-term relationship with suppliers that would benefit customers while ensuring appropriate and transparent revenue recognition.
Tesco PLC (ADR) (OTCMKTS:TSCDY) (LON:TSCO) said its entire team have been retrained and started the move with its suppliers. The company also made further investment in service with more than 6,000 new workers in stores and increased product availability. It also invested in price to enhance offers to customers.
Tesco PLC focused on creating sustainable value
Dave Lewis, CEO of Tesco PLC (ADR) (OTCMKTS:TSCDY) (LON:TSCO) said the supermarket giant is “focused and will continue to focus on doing the right thing for customers. This means running our business in a way that everything we do creates sustainable value.”
“Whilst the steps we are taking to achieve this are impacting short-term profitability, they are essential to restoring the health of our business. We will not engage in short term actions that compromise in any way our offer for customers,” added Lewis.
Furthermore, Lewis said the management has still much to do, but they are making good progress in their plans to improve the long-term position of Tesco PLC (ADR) (OTCMKTS:TSCDY) (LON:TSCO).
According to him, their priorities include restoring competitiveness in UK, protecting and strengthening the company’s balance sheet and rebuilding trust & transparency.
The management of Tesco PLC (ADR) (OTCMKTS:TSCDY) (LON:TSCO) will provide further details regarding the strategies it will implement to improve competitiveness and strengthen its balance sheet on January 8.