Tesco vow to bounce back from £ 6.4bn loss
TESCO posted a £ 6.4billion annual loss yesterday as it wrote off huge chunks of its business and warned of a tough challenge to return to profi t growth this year.
Chief executive Dave Lewis admitted that the loss – one of the biggest in UK corporate history and described by one analyst as “eye- watering” – was a “really big number”, but insisted the group would no longer have a “slavish” focus on its bottom line.
He said the grocer, which recently cut the cost of some its best- known products, was showing “vital signs” of recovery, with sales volumes up for the fi rst time in four years, but shares fell 4 per cent as the dividend was cancelled with no word about when it would return.
Lewis, who joined Tesco last autumn, said: “Our clear priority – and the one that will deliver sustainable value for our shareholders – is to improve consistently for customers. The changes we have made, and will continue to make, put us in a stronger position to do this.”
Trading profi t for the year to the end of February slumped by half to £ 1.4billion, but the bottom line statutory fi gure was weighed down by £ 7billion in one- off items, mostly from a write- down in the value of its store portfolio. UK profi ts were down 79 per cent to £ 467million – with all of these earnings accrued in the fi rst half and the second slightly in the red, as Lewis battled to turn around sliding sales.
Meanwhile, an accounting black hole uncovered last autumn – being probed by the Serious Fraud Offi ce – was found to be £ 63million bigger than previously thought. The full- year loss is the highest recorded by a UK retailer and is among the top 10 largest by a company in this country. It is still eclipsed by the all- time biggest loss of £ 24billion recorded by Royal Bank of Scotland in 2009.
Lewis took charge following a series of profi t warnings culminating in the departure of his predecessor Philip Clarke.
Since the arrival of Lewis, Tesco has announced the closure of 43 loss- making stores as well as shelving plans for a further 49. The group has shut its fi nal salary pension scheme and dispensed with its Blinkbox online video, books and music operations and Tesco Broadband.