Tesco's finance director, Andrew Higginson, told broker Shore Capital that the grocer is internally budgeting for underlying sales growth of 2 per cent compared to the three to four per cent typically targeted.
Shore Capital analyst Clive Black said growth of between 3 and 4 per cent had been a long-standing target. “I can’t remember the last time the budget was less than that,” he said.
Black told the Financial Times: “It is not about the profit forecast, it is about them saying they expect the UK economy to be materially slower. That cascades through the business. They are setting themselves to run off a lower cost base.”
The lowered growth expectation may explain Tesco’s recent decision to change payment terms for non-food suppliers from 30 to 60 days.