SUPERMARKET GIANT SEEKS SALVATION AS IT SWINGS AXE

TESCO boss Dave Lewis started slashing yesterday as he laid out plans to shutter stores, lay off staff and axe its headquarters in a bid to cut overheads by a third, writes

Laura Chesters.

As part of his plan to save millions at the beleaguered supermarket giant, as it faces shrinking market share amid competition from discounters, Lewis, pictured, laid out his priorities to turn the grocer around after four profit warnings in six months.

He will shut 43 loss-making stores, pull out of 49 planned developments, close its defined benefits pension scheme, cap staff pay and suspend the dividend at the UK’s biggest retailer.The City welcomed his severe strategy and its share price jumped 15pc on the news – the biggest one day rise since 1988.

The savings include £250m a year – after a £300m one-off cost – from moving its HQ from Cheshunt to Welwyn Garden City in Hertfordshire, and a £800m saving by not paying out a final dividend.

Lewis has poached bike retailer Halfords’ chief executive Matt Davies to replace former UK boss Chris Bush. Davies, who leaves a potential pay and perks package of up to £3.25m, will join in June and although he will not receive a signing-on bonus Tesco will cover part of his lost share awards.

Price cuts and reducing the number of product lines are part of the shake-up and Lewis confirmed the sale of Tesco Broadband and the video services business of blinkbox to TalkTalk.

It has also hired Goldman Sachs to sell Dunnhumby, the data business behind its Clubcard. A review of its property and international business will continue with an update in April but the rumoured sell-off of its Tesco Bank was not confirmed.

Lewis said: ‘Our liquidity and funding position means we are in a secure place so there is no way there will be a fire sale.’

Tesco reported a better than expected festive period. Sales fell 2pc in the 19 weeks to January 3. However, for the key six-week Christmas period, sales fell just 0.3pc. Its superstores continue to struggle but online sales rose 12.9pc and clothing sales, via its website, soared 52.4pc.

Lewis said: ‘We have some very difficult changes to make.’ But he said Tesco’s recent performance gave him confidence.

Tesco shares soared 27.25p to 209.25p.