Branding for a Tesco store is seen in west London.

London - Tesco, the world's third biggest retailer, said it was on course to meet a lowered range for full-year trading profit after another heavy drop in underlying sales in its main British market.

The group, which on Thursday posted a 2.4 percent fall in sales at British stores open over a year, excluding fuel and VAT sales tax, for the six weeks to Jan. 4, said cuts in forecasts since November were due to a weaker grocery market and a greater than expected shift of general merchandise in the industry to online.

“The range has moved (down) at the top end by about 50 million pounds ($82.35 million) and at the bottom end it has moved nearly 150 million pounds down on the range,” Tesco Chief Financial Officer Laurie McIlwee 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 pounds and 3.41 billion pounds, with a mean of 3.33 billion.

That would represent a fall from 3.45 billion pounds in 2012-13 and a second straight year of decline.

McIlwee said the more cautious stance was also due to uncertainty around when the UK grocery market would improve and the effects of political unrest on its business in Thailand.

Analysts at Deutsche Bank said taking those factors into consideration it expected consensus to settle at around 3.24 billion pounds, 3 percent below its own forecast. - Reuters