Tesco's share price plunged 8 per cent in early trading after issuing a shock profit warning this morning.
The struggling supermarket reduced full-year forecasts from £2.8bn to £2.4bn amid tough trading conditions and expects to reduce its dividend by 75 per cent on last year’s interim payout to 1.16p per share when it reports interim results on 1 October.
The retailer also brought forward the start date of new boss Dave Lewis, a replacement for outgoing chief Philip Clarke, by a month.
Lewis will start on Monday, rather than October 1, as Tesco looks to “improve its competitive position”.
Profits for the six months are expected to 23 August are expected to be around £1.1bn, the supermarket giant said.
Tesco chairman Sir Richard Broadbent said:
The Board's priority is to improve the performance of the Group.
We have taken prudent and decisive action solely to that end. Our new Chief Executive, Dave Lewis, will now be joining the business on Monday and will be reviewing every aspect of the Group's operations. This will include consideration of all options that create value for customers and shareholders.
The actions announced today regarding capital expenditure and, in particular, dividends have not been taken lightly. They are considered steps which enable us to retain a strong financial position and strategic optionality.