Lately, it’s more surprising when a month passes in which Tesco doesn’t issue a profit warning.
The woes at the world’s second-largest retailer continued today, as it trimmed its earnings expectations once again. The company expects to turn a trading profit of no more than £1.4 billion ($2.2 billion) in its current fiscal year, less than half of what it made last year and less than analysts were expecting, even after three previous profit warnings this year.
Although Tesco only started reporting its trading profit—which excludes taxes and a range of non-operating items—in 2007, by other earnings measures its performance this year will be the worst since 2002:
For a better sense of how long it’s been since Tesco fared so poorly, here’s a taste of what was making news in Tesco’s UK home market back around this time in 2002:
- Most popular British Christmas toy: Beyblades
- Top UK film: The Lord of the Rings: The Two Towers
- Top UK single: “If you’re not the one” by Daniel Bedingfield
- Premier league top three: Arsenal (35 points), Chelsea (33), Manchester United (32)
In the latest profit warning, Tesco boss Dave Lewis cited the costs of cleaning up the company’s accounting snafu and investing in sprucing up stores. Lewis’s three-month tenure at the retailer has been marked by one crisis after another—he became known as “Drastic Dave” for the depths of cuts he made at Unilever, his previous employer, and he probably wishes that the nickname wasn’t still so apropos, for other reasons.
Tesco was already losing market share to low-cost upstarts before it revealed overly aggressive accounting practices around the rebates it negotiates with suppliers. The company is now hiring 6,000 extra staff and instituting a new revenue-recognition process that is “transparent and appropriate,” Lewis said.
The retailer’s long-suffering shareholders aren’t too pleased:
Tesco’s share price fell by as much as 17% at one stage today, to a level last seen in 2000. Here’s what was happening in December back then:
- Most popular British Christmas toy: Teksta the Robotic Dog
- Top UK film: How the Grinch Stole Christmas
- Top UK single: “Never had a Dream Come True” by S Club 7
- Premier league top three: Manchester United (40 points), Arsenal (34), Leicester City (29)
S Club 7? Jim Carrey hit films? My, how far Tesco has fallen.