Tesco slashes shareholder dividend by 75%
Tesco has announced Dave Lewis will be coming on stream one month earlier than planned to complete a full review of the business in a bid to improve shareholder returns
Print29 August 2014
The board of Tesco plc has issued another profits warning and said it anticipates setting its interim dividend at 1.16p per share – a hefty 75% reduction.
The retail giant also announced new chief executive Dave Lewis will start on 1 September – one month earlier than planned – to review “every aspect” of the business.
Trading profit was forecast to be in the range of £2.4bn – 2.5bn in the current 2014/2015 financial year, according to the group’s trading update published earlier today (29 August). This is far below market expectations and a substantial decrease on the £3.3bn reported in the previous year.
“The combination of challenging trading conditions and ongoing investment in our customer offer has continued to impact the expected financial performance of the group,” Tesco said in the statement.
As well as bringing Dave Lewis on board earlier than anticipated to “improve its competitive position”, the retailer has revealed that it will be implementing further reductions in capital expenditure.
For the current financial year capital expenditure will now be no more than £2.1bn, some £0.4bn less than originally planned and a reduction of £0.6bn from the previous financial year. This will be achieved in a number of areas including IT and the slower roll-out of our store refresh programme.
Sir Richard Broadbent, Tesco chairman said: “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.”
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