Tesco set to reveal drop in profits

Supermarket giant Tesco will unveil its first fall in profits for nearly 20 years today as weaker international sales add to its floundering UK performance.

Tesco is forecast by broker Shore Capital to report pre-tax profits of £1.5bn for the six months to August 25, a drop of 12 per cent on the same half last year. This will be the first fall since 1994.

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While the UK performance is expected to show some signs of stabilisation, it is the overseas businesses, such as its European, Asian and US ventures, which will weigh on the overall group performance.

The focus is still likely to remain on its attempts to revive the UK arm, which most recently reported a 1.5 per cent fall in underlying sales in the 13 weeks to May 26.

Despite its latest quarterly sales decline, Tesco said its £1bn turnaround plan, which has seen it revamp 100 stores and recruit 4,300 extra staff, is beginning to gain traction.