Tesco cuts its profit forecast

British grocer Tesco has cut profit expectations for the fourth time this year, blaming the cost of trying to recover from an accounting scandal and a slide in market share.

Shares in the world’s third-biggest retailer plunged as much as 17% to a 14-year low yesterday, after it said group trading profit for the year ending February 2015 would not exceed £1.4bn (€1.77bn). That is almost 30% below analysts’ average forecast of £1.94bn.

After two decades of uninterrupted growth, Tesco lost its way as it concentrated on a costly and, in the case of the US and Japan unsuccessful, expansion abroad. It was slow to respond to changing shopping habits such as the rise of discounters, convenience stores and online shopping that hit its reliance on huge out-of-town stores. And its problems were compounded in September when new chief executive Dave Lewis reported the company had overstated expected first-half profits by £250m, a figure later raised to £263m.