TESCO is flexing its muscles as a huge price war with rivals threatens Britain’s biggest retailer.
The supermarket — which yesterday toasted its highest market share in almost a decade — earmarked £400million for cuts to its groceries.
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That sent a clear message to ASDA and other competitors that they will not be eating its lunch.
The move spells cheaper food for shoppers — despite warnings about inflation creeping back up.
Tesco took action after Asda — hit by a four-year collapse in sales — said it had a “substantial war chest” to fund a revival.
Asda’s chairman Allan Leighton last month spearheaded a fightback — declaring the grocer would sacrifice its profits to slash prices and win back customers.
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The move wiped £1billion off Tesco’s share price as investors realised its days of easy wins over rivals might be over.
In response, Tesco yesterday warned investors it would have to sacrifice some profits to adjust to the “more competitive market”.
Chief executive Ken Murphy said: “Competitors are clearly looking to defend the shares we’ve been taking.”
And he suggested Tesco is largely cushioned from tariffs as the bulk of its supply comes from the UK.
But the chain warned this year’s adjusted profits could be as low as £2.7billion compared to £3.1billion reported for the year ended in February.
Its sales rose by 3.5 per cent to £63.6billion during that period.
But Tesco finance chief Imran Nawaz said the company does not want to “constrain ourselves or not have the firepower to be as flexible as we need”.
The profit warning knocked its share price by almost five per cent to 318.7p.
The share price of rival Sainsbury’s was knocked down by 3.56 per cent because investors fear it will find it harder to protect profits while punching against Tesco and a stronger Asda.
Analyst Clive Black of Shore Capital quipped that Tesco is “getting the knuckle duster out”.
He explained: “It’s basically saying take us on and we’ll win.”
An industry source said Asda would struggle to go head-to-head with Tesco because its private equity ownership is more financially constrained.
Tesco said that it plans to strip out another £500million in costs as it faces a barrage of challenges this year — including a £235million hit from increased National Insurance contributions.
Trumped by tariff
ELECTRONICS manufacturer TT Electronics yesterday warned that US President Donald Trump’s trade war had put its future in doubt.
The Woking-based business makes parts for the healthcare and aerospace sectors. It has sites in the UK and US.
A spokesman said the uncertainty over tariffs could impact the firm’s “ability to continue as a going concern” due to higher costs and customer reluctance to place orders.
Versace deal is in the bag
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PRADA has struck a £1.1billion takeover of Versace in a deal that will bring together two of Italy’s biggest luxury powerhouses.
Miuccia Prada, 75, continues to control the fashion house started by her grandfather, while Donatella Versace, 69, has stepped down from the business founded by her brother Gianni after 30 years.
Prada is understood to have negotiated a £155million discount on the deal due to the impact on share prices of Donald Trump’s tariffs.
Versace’s iconic designs have included the safety pin dress Elizabeth Hurley wore to the Four Weddings and a Funeral premiere in 1994 and the green palm outfit Jennifer Lopez wore to the Grammys in 2000.
EY is fined £5m
ACCOUNTING firm EY has been fined nearly £5million for failing to properly check travel agent Thomas Cook’s accounts before it collapsed.
It resulted in 9,000 job losses and 150,000 people who were stuck abroad in 2019. The Financial Reporting Council said EY’s failings were serious given Thomas Cook’s precarious financial position.
The FRC said it was imposing sanctions for audits in 2017 and 2018. EY admitted serious breaches and said it “deeply regrets” that standards fell. It was fined £4.88million.
Wayve to go on AI in Nissans
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A BRITISH self-driving car start-up has signed a deal with Nissan to plug its tech into the Japanese car maker’s vehicles.
Wayve, founded in a garage by Cambridge University graduate Alex Kendall, has already developed AI algorithms for cars to drive by themselves.
Its tech analyses real-life driving scenarios and controls a car’s steering wheel, throttle, indicators and brakes.
The AI system allows cars to “learn” while driving so they can react to situations in a “human-like manner”.
Nissan said the system is being developed for mass production by 2027 — but will require the tech to be used under “driver supervision”.
The firm said it was confident the tech will be successful in replicating “a careful and competent human driver”.
Wayve is already considered a rare British tech success story after raising $1billion last year from titans Microsoft, NVIDIA and Softbank.
RETAILERS suffered a disappointing March as footfall fell by 5.4 per cent due to the late timing of Easter, the British Retail Consortium said.
But Mother’s Day provided a boost, driving a 13.4 per cent lift in high street footfall, compared to the year before.
FCA chief stays
THE boss of the UK financial watchdog has been reappointed for another five years, the Treasury said.
Nikhil Rathi will remain chief executive of the Financial Conduct Authority (FCA) for a second term.
The FCA has faced pressure to overhaul its enforcement policy after criticism of its “name and shame” approach for firms facing investigations.
It came under fire from an influential House of Lords committee last month.
Mr Rathi said it would be more “flexible” in future.
