text: Here is what analysts made of Tesco's third profit warning this year
  Fri 29 Aug 2014 06.46 EDT Last modified on Sat 2 Dec 2017 13.09 EST
  Tesco supermarket in London. Photograph: Leon Neal/AFP/Getty Images
  Tesco issued its third profit warning of the year on Friday and slashed its half-year dividend and capital spending. New chief executive Dave Lewis is being parachuted in a month earlier than planned and will now take the reins on Monday. Here is what analysts made of the news.
  James Anstead, Nicolas Champ and Julie Zhuang, retail analysts at Barclays
  The profit guidance reflects the ongoing difficult trading conditions and the slower-than-expected response to recent initiatives. However, the cuts in the dividend and in capex are designed to give maximum flexibility to the incoming CEO – Dave Lewis – who will now take up his role a month earlier than expected, next week.
  Although another cut in profit forecasts sharply illustrates the challenges Tesco faces in its core UK business, the statement hints at the possibility of more radical approaches towards restoring health to the UK core business and towards highlighting the value in its other assets. We would expect the initial reaction to this statement to be negative, although it may also generate the expectation of more creative and positive news from the new CEO in time.
  Darren Shirley, retail analyst at Shore Capital
  We have now lost count of the number of times that we have downgraded our forecasts for Tesco over the last three years. Whilst so, we have another announcement today that represents the inverse of whatever the icing on the cake stands for.
  We are pleased that the appointment of Mr Lewis has now been brought forward to 1st September (i.e. this Monday).
  It is very disappointing to see this update, which fundamentally raises questions in our minds about the capability of the management under Mr. Clarke at this once great company. As such, we expect, as part of a range of measures, there to be considerable senior management change under Mr. Lewis in time, as Tesco needs a world class top team to take it forward.
  We can speculate but not predict Mr. Lewis' priorities. As such, we should also respect the fact that he needs time to assess matters and manage the business. Hence, whilst this update is unhelpful, it does not adjust our view that Tesco UK needs fundamentally better management and that this is a group where the pint can still be more than half full. In time Mr. Lewis may also have views on the make-up of Tesco but stemming the tide of decline in the core has to be the priority.
  However, potential upside will only emerge from what Mr. Lewis can deliver; as such we need to await his prognosis of how he perceives the prospects at the most fundamental level for Tesco; earnings and income stream. ‎In this respect where does capital expenditure settle, any potential disposal strategy (e.g. should Tesco list its Asia business in Hong Kong) and restructuring charges are also at the front of mind.
  Having been parachuted in a month earlier than planned, one of the chief executive's immediate aims will be to prevent a Tesco profits warning becoming an annual event. Even at the upper end of its revised trading profit forecast, the figure is 11% lower than originally thought. From an investment perspective, one of the attractions of the stock for long-suffering shareholders had been the dividend yield, around 6% prior to this update, which is now being decimated.
  Of course, the rationale for the crimp on overall capital expenditure s understandable and prudent, whilst the timing of the announcement enables the incoming chief executive to begin with the kitchen sinking having been done. Meanwhile, Tesco will continue to examine each aspect of the group's operation in an effort to stabilise its profitability and market share, both of which remain far ahead of its rivals.
  However, if investors' resolve was being tested up until this statement, it is now nearing breaking point. Even before today's precipitous fall, the share price had declined 34% over the last year, as compared to a 5% hike for the wider FTSE100. Patience may be a virtue which investors no longer possess, and the market consensus of the shares as a sell will surely remain intact."
  Tesco's problems aren't unique to it with its peers in the sector Sainsbury's, Asda and Morrisons getting buffeted by similar headwinds in the retail sector as all lose market share to the young upstarts of the retail sector as Aldi and Lidl eat into their market share, at the bottom end and Waitrose at the top end.
  This morning's announcement has all the hallmarks of a clearing of the decks as the new CEO Dave Lewis starts work on Monday 1st September. The key question being asked now is whether these actions will be enough to stop the haemorrhaging of value that we've seen in the past few months.
  The company has announced it will be cutting capital expenditure and slowing down its store revamp programmes, as it works to stem a slide in its market share from levels of 30.2% a year ago to 28.8% now.
  Given the presence of the new kids on the block and pressure on consumers wallets the company will have to work very hard to stand still and given its market share and the lower cost bases of the budget retailers it almost seems inevitable that we will see further erosion in that market share, towards the 25% level.
  In that regard when you are top of the pile the only way is down, just ask Manchester United.
  What that means for the share price is anyone's guess but from a purely confidence point of view we would need to see a significant move back above the previous lows at 240p to increase confidence that we are near to a short term base.
  The one thing Tesco does have on its side is its size and scale, in that it can afford to shrink its margins further, and in the process squeeze its competitor's margins that much harder. That may not be good for the share price values of the food retail sector, but it's bound to be good for the consumer's wallet as the weekly shop gets cheaper.