Tesco (TSCO.L) the under fire supermarket chain today posted a record £6.4Bln loss to the year ending February. Compared to a £2.26Bln profit record the year before.
The loss is the largest ever suffered by a UK retailer and enters into 6th place in the largest ever losses recorded in this countrys corporate history.
Tesco (TSCO.L) has suffered from a dramatic drop in the value of its property portfolio amid falling footfall in its stores. This accounts for £4.7Bln of the losses. Tesco had said earlier this month it intends to close 43 stores.
Tesco (TSCO.L) is also feeling the pinch from competition with discount retailers and like for like sales excluding fuel are down 3.6% in the last year in the UK. This has hurt Tesco sales even more in the European markets with sales down year on year in Ireland 6.3%.
Chief Executive Dave Lewis commenting said:
“It has been a very difficult year for Tesco. The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years. We have faced into this reality, sought to draw a line under the past and begun to rebuild, and already we are beginning to see early encouraging signs from what we’ve done so far.
Over the last six months we have put customers back at the centre of everything we do. By focusing on the fundamentals of availability, service and targeted price reductions, we have seen a steady increase in footfall, transactions and, most significantly, volumes. More customers are buying more things at Tesco.
We are making deep changes to the way we organise and run our business, with a simpler, more agile office team, more colleagues serving customers and a new approach to the way we work with suppliers. I do not underestimate how difficult some of these changes have been for the team and I thank everyone for their professionalism and contribution at this time of great change.
The market is still challenging and we are not expecting any let up in the months ahead. When you add to this the fundamental changes we are making to our business and our offer, it is likely to lead to an increased level of volatility in short-term performance. 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.”
Investors reacted positively despite the results with the share price of Tesco (TSCO.L) slightly up on the day at 235.7p