Tesco, the world's second-largest retailer in terms of sales after Walmart, reported declining like-for-like U.K. sales and profits Wednesday, as its new chief executive warned of further deflation in the supermarket's all-important home market.
Dave Lewis, brought in as chief executive from consumer goods giant Unilever to be Tesco's chief executive last year, told CNBC: "We think there's more deflation to come in the second half."
Asked whether this would mean a cut-price Christmas at the retailer, he said: "There are more things (for the customer) that I would like to do in the second half of this year."
First-half like-for-like sales in the U.K. fell by 1.1 percent from the same time in 2014, while group operating profit before exceptional items halved to £354 million compared to the same period last year.
The U.K.'s dominant supermarket faces increasing competition both at the bottom and top end of the market.
"This is already a very different business to the one we joined last September," Lewis told reporters. "Changes are coming together and delivering momentum."
He added that the retailer is "on or ahead of target" on its internal measures, and expects better sales and profitability throughout the second half of the year, but declined to elaborate further on its margin targets for next year.
Tesco's share price still hasn't recovered from the accounting scandal which emerged in September 2014. The U.K.'s Serious Fraud Office is expected to announce whether it will prosecute individuals at the company, or Tesco itself, by the end of 2015. Lewis said that the company is continuing to co-operate with the SFO but would not comment further on the investigation.