Tesco to cut IT investment amid profit warning

Tesco has announced it will be making further cuts to its capital expenditure this year, including reducing its investment in IT, following a profit warning.

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Tesco has announced it will be making further cuts to its capital expenditure this year, including reducing its investment in IT, following a profit warning.

Earlier this year, Tesco had announced a number of technology investments to help reverse its fortunes. This included more automation in its product picking for online shopping, the launch of a new digital device to follow the Hudl tablet and an e-wallet. It is not clear if these projects will be affected by the cuts.

Tesco said in a trading update today: “For the current financial year capital expenditure will now be no more than £2.1 billion, some £0.4 billion less than originally planned and a reduction of £0.6 billion from the previous financial year. This will be achieved in a number of areas including IT and the slower rollout of our store refresh programme.”

The UK’s largest supermarket chain, which is suffering from competition from low-cost supermarkets Aldi and Lidl, said it expected trading profit for full-year 2014/15 will fall to between £2.4 billion and £2.5 billion, from £2.8 billion. It is also reducing the interim dividend by 75 percent compared with last year.

The retailer’s new chief executive, Dave Lewis, will also be starting a month earlier than planned, on Monday 1 September. He will be reviewing the whole of the group’s operations to improve its competitive position, Tesco said.

The company will provide another update in its planned interim results announcement due on 1 October.

Dave Lewis, formerly Unilever’s marketing lead, is replacing Philip Clarke, who announced his resignation last month as Tesco revealed poor sales and trading profit.

In April, Clarke admitted that Tesco would “take some time” to start growing again following investments in automation, customer e-wallets and a new digital device.

Tesco’s CIO for internet retailing, Carl Dawson, was recently appointed Marks & Spencer’s new IT director.

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