Tesco, Britain's biggest retailer, reported its worst Christmas sales performance for decades on Thursday and warned it would see minimal profit growth next year as it invests in winning back shoppers.
The world's third-largest stores group said on Thursday it now expected minimal trading profit growth for 2012/13 against analysts' forecasts for a 10 percent increase. It will cut back large store openings, while investing in the internet.
The supermarket group, which makes about 70 percent of operating profit in Britain, said sales at UK stores open over a year fell 2.3 per cent excluding fuel and VAT sales tax in the six weeks to 7 January.
That compares with an average forecast decline of 0.9 per cent in a poll of 17 analysts, though several had warned a lower figure was possible after weak market research data for Tesco on Tuesday.
It also puts the supermarket group on course to deliver its fifth straight quarter of declining underlying UK sales.
"We are disappointed with our seasonal trading performance in the UK," chief executive Philip Clarke said.
"In a challenging consumer environment at home, and with early signs of more cautious behaviour emerging elsewhere, we have seen more strain than anticipated on our profitability during the important seasonal trading period."
Underlying profit before tax and earnings per share for 2011/12 would be broadly in line with analysts' consensus forecasts, it said, but group trading profit growth is likely to be around the low end of the current range.