Tesco is expected to see a £70m cut in profits in its South Korean business this year as the result of changes to large store opening hours.  

Tesco brokers JP Morgan Cazenove and Nomura have cut their forecasts for pre-tax profits for the year by 2% to around £3.5bn as a result of new laws which force the grocer to close on two days a month and restrict opening hours.

Shore Capital analyst Clive Black told the Financial Times: “Whereas we see steady progress in stabilising the UK, we have growing worries about the financial performance outside the core chain, largely due to factors beyond Tesco’s control.”

The news comes as Tesco has appointed US advertising agency Wieden + Kennedy to handle its £110m creative account.

The agency has worked with Nike, Honda and Nokia although it has no major retail experience.

W+K is charged with turning around Tesco’s image in the UK following its first profit warning in 20 years in January. Chief executive Philip Clarke is enacting a £1bn plan to “reset” the UK business.

It is understood Tesco has waited to appoint the agency before advertising its new marketplace selling third party goods which soft launched in April.

The grocer has also launched a significant new promotion. Tesco is offering 50p off a litre of fuel when customers spend £48 on five key brands - Andrex, Robinsons, Nescafe, Heinz and Fairy betweem July 23 and August 1.

Black branded the promotion a “telling discount” in a narrow timeframe and said it “may gain customer traction” although noted it is targetted at bulk buyers.