Tesco launches a £2bn fightback

The plans will be revealed alongside Tesco’s full-year results on April 18. The supermarket giant, Britain’s biggest retailer by sales, issued its first profits warning for 20 years in

January following a disappointing Christmas trading period. ** CLICK HERE TO CLAIM A FREE COPY OF ONE OF OUR MONEY & FINANCE GUIDES ** UK head Richard Brasher left the firm last month,

leaving Tesco group chief Philip Clarke to take the reins. A Tesco spokesman said: “The money will go towards staff investment and price reduction. Full details will be announced on April

18.” The retailer is to hire 20,000 staff over the next two years. Philip Dorgan, an analyst at Panmure Gordon, said: “There will be a £500 million revenue investment in recovery and it will

take time to persuade customers to change their shopping habits. “The refocusing of Tesco’s £1 billion plus capital expenditure programme back into its current store portfolio will also

take time.” The £500 million could be invested into price reductions. A new aggressive pricing strategy could trigger another supermarket price war. The move is being viewed by rivals as

“buying sales” and one even accused Tesco of “printing money and giving it away in a demented effort to win back customers”. The retailer would pay for its £1 billion-£1.5 billion stores’

overhaul by cutting £300 million of capital expenditure elsewhere. It is also expected to revitalise its product ranges. Panmure forecasts that Tesco UK will report flat like-for-like sales

when it announces its full-year results on April 18. It forecasts that the UK operation will see a 15 per cent drop in profits in the next financial year along with negative like-for-like

figures. Dorgan warned that there are no “quick fixes”. He said: “The profit warning was five years in the making. Therefore, we think that UK recovery will take five years. “Management has

acknowledged the need for decisive and rapid action as it seeks to rebuild its customer proposition.” Rahul Sharma, managing director of investment firm Neev Capital, said: “Tesco needs to

hire a UK chief executive as a matter of urgency, it is extremely difficult to do two high-profile jobs at once. “Apart from that, it is bad corporate practice not to have a person dedicated

to the UK operations.”