LONDON (SHARECAST) - The strategic problems at Tesco are getting worse, according to Investec, which still recommends to sell shares in the supermarket giant.
Tesco disappointed with its interim results on Wednesday, missing trading profit forecasts by 3%, leading to further downgrades to forecasts, Investec said.
The broker cut its own earnings per share (EPS) estimate by 7% for this year and the next due to poor trade and weak margins.
"Tesco pointed to an improvement in UK sales, but this still represents a significant LFL volume loss," said analyst Dave McCarthy.
"Meanwhile problems in Asia and Europe are mounting and the US continues to lose money, while the Bank is standing still on an underlying basis," he said.
Investec said that Tesco's strategy needs a "major overhaul". The broker has kept its 295p target price on the shares, saying that the risk remains on the downside.
By 10:02, shares were trading 1.50% lower at 313.36p.