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Largest annual loss in UK retail history

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article-2281448-1784A919000005DC-517_634

 

£6.4b

 

Madness 

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Thats loose change to them

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High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/ba06f878-e8b8-11e4-b7e8-00144feab7de.html#ixzz3Y1SWfTAY

 

Tesco slides to record £6.4bn annual loss

Andrea Felsted, Senior Retail Correspondent

 

Tesco has capped a disastrous year with a pre-tax loss of £6.38bn, the worst performance in its near 100 year history and bigger than even the most pessimistic analyst expectations.

The retailer, once hailed as Britain’s most successful, said on Wednesday that £7bn of writedowns and charges — primarily £4.7bn for the slump in the value of its UK store estate — pushed it into the red in the year to the end of February.

 
The loss compares with a pre-tax profit of £2.26bn in the year earlier. It is one of the biggest in British corporate history for a company that is not a bank and compares with Cable & Wireless’s deficit of £6.4bn in 2003.

However, shares in Tesco rose 1 per cent to 237p after the results.

“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,“ said Dave Lewis, chief executive.

“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.”

 
 

The slide into the red adds to an annus horribilis for Tesco, in which it ousted its chief executive, Philip Clarke, after its worst sales performance in 40 years, replacing him with Mr Lewis.

Just weeks after taking up his new role, Mr Lewis announced that first-half profit had been overstated by £250m, sparking a series of inquiries, including by the Serious Fraud Office.

Tesco subsequently revealed in October that the overstatement was in fact £263m, as it also parted company with its chairman Sir Richard Broadbent.

The property writedowns reflect the reduction in the value of Tesco’s UK store estate, as Britain’s supermarkets come under pressure from consumers moving away from doing big weekly shops at out of town superstores, and the rise of the no-frills discounters Aldi and Lidl.

“The market is still challenging and we are not expecting any let up in the months ahead”

- Dave Lewis

Tesco has also closed 43 stores and shelved 49 development projects, where in many cases the land will have been acquired for much more than its current value.

Some £3.8bn of the property charge relates to trading Tesco stores, with £925m for jettisoned projects.

In addition, Tesco took a £878m of goodwill writedowns on the value of its subsidiaries, including £630m for its joint venture in China, after partner China Resources Enterprise agreed to sell its retail businesses to its parent.

There was also a £570m charge for stock that had slumped in value, and about £200m for UK businesses, including Dobbies garden centres and coffee chain Harris + Hoole.

There was a £416m restructuring charge as the retailer cuts thousands of jobs, and about £200m for overstating commercial income – the money it receives from suppliers for selling more of their products or funding promotions – in earlier years.

 

Timeline of Tesco’s slump to a £6.4bn loss

The events that led up to the retailer’s record loss.

Continue reading

Excluding goodwill amortisation, exceptional items and property losses, trading profit more than halved from £3.3bn to £1.4bn, in line with market expectations.

Tesco also said its net pension deficit had ballooned to £3.9bn from £2.6bn, as bond yields — used to calculate future liabilities — fell. Net borrowings also rose from £6.6bn to £8.5bn.

Britain’s biggest retailer will pump £270m a year into its pension fund to help address the shortfall.

Mr Lewis said that despite the headline loss, and a second half loss for the UK business, Tesco was seeing some improvements in trading.

The volume of goods sold in Tesco’s UK stores was increasing for the first time in four years, helped by price cuts, but also more staff in stores, and better availability of products.

“That is the basis of a great retail business, and we are a great retail business,” he said.

But he warned that the market was 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”.

He also cautioned that that while Tesco would “aspire” to the level of trading profit in the year to February 2015, he would be prepared to invest more money to improve the performance if necessary.

 

 

 

 

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Thats loose change to them

 

yea?

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Tesco have really been struggling to adapt to the change in the market.

 

Even when I go in there now they're still clearly over priced.

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loosing 91m a week.... 

 

 

most of it is down to their property values though.......

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That is not loose change. At all. For any company in the world. A real stupid comment.

Lots of cuts, store closures, tatty looking stores for Tesco coming soon.

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Tesco been falling off for some time now

 

Prefer sainsburys and funny thing is tescos is generally cheaper but its not always the cheaper the better

 

its small things like the quality of certain products 

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Good cunts have turned some great boozers into them shitty little Metro stores.

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Tesco been falling off for some time now

 

Prefer sainsburys and funny thing is tescos is generally cheaper but its not always the cheaper the better

 

its small things like the quality of certain products 

 

trust, tesco meat is so poor.

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Tesco been falling off for some time now

 

Prefer sainsburys and funny thing is tescos is generally cheaper but its not always the cheaper the better

 

its small things like the quality of certain products 

 

trust, tesco meat is so poor.

 

 

I thought meat from most these supermarkets was the same, just repackaged differently.

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Since Iain MacLaurin and Terry Leahy left it's been coming

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Seen my Tesco deteriorate in the same way my local area has. Looks a mess and the staff there now don't care.

Last straw was when they stopped selling Cajun spice.

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They give out a lot of offers considering the losses they are making. Used to shop at ASDA mostly but Tesco were sending me out £15 off £60 spend etc all the time so was ordering online with them. Plus the refunds they were giving if they calculated my shop would of been cheaper anywhere else. Great for the customer but can't be good business for them.

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waitrose is the new one

the new one yeah...

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these man open a new shop every fortnight on some of the deadest locations/dustiest strips

 

aldi n asda >

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Thats loose change to them

 

:/

 

/

 

Waitrose>___

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waitrose is the new one

the new one yeah...

 

 

waitrose is the new one

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Its nit really tesco the supermarket that took the loss though

They lost almost 5bn on property valuations

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Which is a loss of 5bn worth of value you can leverage against.

 

Considering that the company has a junk credit rating already, that can affect Tesco the supermarket.

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