Struggling supermarket giant Tesco (TSCO) has slashed its interim dividend by 75 per cent to 1.16p a share, as it announced yet another profit warning against a backdrop of falling sales.
Trading profit for the current financial year is expected to be £2.45bn to £2.5bn, between a quarter and a third lower than last year and roughly 12 per cent lower than City forecasts. Profits in the first six months of the year will come in around the £1.1bn level, down from £1.58bn in 2013. Mike Dennis, an analyst for Cantor Fitzgerald, says this implies that Tesco's UK trading profit in the first-half could be down by as much as a quarter.
While the dividend cut was widely expected - it was just a question of when - more surprising was news that chief executive Philip Clarke is to step down earlier than planned, with new boss David Lewis taking the reins from Monday 1 September. Tesco said in a statement that Mr Lewis would be "reviewing all aspects of the group in order to improve its competitive position and deliver attractive, sustainable returns for shareholders".
The company also announced a £400m reduction in capital spending for the full-year to no more than £2.1bn, which will see it cut funding for IT projects and store refits. Tesco chairman Sir Richard Broadbent said these actions had "not been taken lightly".
