Tesco has lowered its range for full-year trading profit following a heavy drop in underlying sales over Christmas.

The retailer is 21 months into a turnaround plan for its main UK business that has seen over £1 billion invested in store revamps, more staff, new product ranges and pricing initiatives.

Despite the changes Tesco this morning said sales at British stores open over a year, excluding fuel and VAT sales tax, had fallen 2.4 per cent in the six weeks to January 4.

That compares to analyst forecasts in a range of down 0.5-2.5 per cent and a third quarter decline of 1.5 per cent.

"The range has moved (down) at the top end by about £50 million and at the bottom end it has moved nearly £150 million down on the range," Tesco chief financial officer Laurie Mcllwee told reporters.

“There are a new set of forecasts in the market that are more up to date with these very big changes and more appropriately reflect where we think our eventual outcome will be.”

Tesco said it now expected to report a full year group trading profit within the range of current market expectations, which it said ranged between £3.16 billion and £3.41 billion.

Reuters