Tesco issued a profit warning today as CEO Dave Lewis “reset” the business to focus on service, availability and more competitive prices.
The retailer said trading profit for the financial year ending February 2015 would not exceed £1.4bn, compared with analysts’ forecasts which ranged from £1.8bn to £2.2bn.
Lewis revealed he had decided to reject the sort of measures it might have used in the past, including cutting staffing levels in January and February to prop up profits and also said that investments to ensure availability and competitive pricing for its top 1,000 lines would continue.
However, he stopped short of announcing what many expect to be a fully-fledged assault on prices in the New Year.
The Grocer has previously revealed that Lewis had given the green light for a major expansion of staffing hours in store and Lewis revealed today that 6,000 more colleagues had been brought in, with “early indications” that they were having a positive impact of service.
Lewis also promised a “new relationship” with key suppliers, revealing that he and new UK and global commercial boss Jason Tarry has met with key suppliers last week to discuss a strategy involving “longer term relationships.”
Following the scandal over its £263m financial black hole in its accounts, currently being investigated by the Serious Fraud Office, Lewis said 963 members of its commercial team had received training aimed at forging a new way of working with suppliers.
Last week The Grocer revealed Tesco had approached suppliers seeking to secure better prices from falling commodity prices and Lewis confirmed that this was a “very live market dynamic”.
As part of a series of management changes, also revealed last week, Lewis announced he was taking hands on control of the UK but today he confirmed that was a temporary measure and that he was planning to appoint a new UK MD within the next two months.
“We are investing in resetting the proposition,” said Lewis. “We want to get back to our core principles and reset the service and improve availability.
I’ve already seen some encouraging signs of the measures were taken having an impact and we’re going to keep our focus on the customer. I’m not going to do anything which could affect that proposition and service delivery. It’s no longer up for debate.”