LONDON-- Tesco PLC has issued its fourth profit warning in three
years and said it is investigating why it overstated its most
recent profit forecast by GBP250 million ($408.8 million).
"We have uncovered a serious issue and have responded
accordingly," Dave Lewis, the supermarket's newly-appointed chief
executive, said on Monday. Mr. Lewis took on the role at the start
of September, a month earlier than planned.
Last month. the U.K.'s largest retailer cut its profit guidance
for the year to between GBP2.4 billion and GBP2.5 billion.
"The chairman and I have acted quickly to establish a
comprehensive independent investigation," said Mr. Lewis.
"The board, my colleagues, our customers and I expect Tesco to
operate with integrity and transparency and we will take decisive
action as the results of the investigation become clear," he
said.
Tesco's shares plunged in early trading Monday, falling as much
as 11%.
The U.K. group, which vies with Carrefour SA of France for the
position of world's second-largest retailer behind Wal-Mart Stores
Inc., is struggling against fierce competition in its key home
market.
Tesco now has issued three profit warnings in the past nine
weeks as it tries to deal with price pressure in the U.K. grocery
market, where the market share of Tesco and its large rivals is
being eroded by no-frills competitors, as well as the effect of
costly investments overseas.
At the time Tesco revised its profit outlook lower in August,
the company also slashed its interim dividend by 75% and said it
would reduce capital spending by GBP400 million to GBP2.5 billion
as it slowed the rollout of new stores.
Write to Ed Ballard at ed.ballard@wsj.com
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