Tesco and Sainsbury’s are among U.K. retailers lowering their profit expectations and cutting costs and services due to higher business tax rates and expenses.
Tesco said it needs to cut GBP 500 million (USD 663 million, EUR 583 million) in costs due to the GBP 235 million (USD 312 million, EUR 274 million) it and other retailers are now facing in national insurance contributions (NICs) and other operating expenses.
Additionally, the retailer lowered its annual adjusted operating profit forecast for its next fiscal year to between GBP 2.7 billion (USD 3.6 billion, EUR 3.1 billion) and GBP 3 billion (USD 4 billion, EUR 3.5 billion), which is below the GBP 3.1 billion (USD 4.1 billion, EUR 3.6 billion) it brought in the previous year.
“We’ve ended this financial year with more people than we started the year. So, I think we’re using those savings to drive growth,” Tesco CEO Ken Murphy said when asked whether the cost-cutting measures would put jobs at risk, per The Guardian. “We never rule out job cuts. It [would] be naive to do that, but at the same time, I think our track record speaks for itself.”
Tesco said it already slashed GBP 510 million (USD 676 million, EUR 595 billion) in costs last year.
Similarly, Sainsbury’s warned about flat profits this year due to higher expenses and price wars with other grocery competitors.
Nevertheless, the grocery chain said due to cutting 3,000 jobs and closing cafes that its fiscal year sales (excluding fuel) for the 52 weeks to March increased 4.2 percent year over year to GBP 26.6 billion (USD 35 billion, EUR 31 billion)...
