Tesco Reports Worst Results in Its 97 Year History

22 Apr 2015 --- Tesco, the UK’s largest retailer, has reported a full year loss of £6.4bn, its worst results in its 97 year history. The results come just months after Tesco announced the arrival of a new boss, Dave Lewis, and a major restructuring program to save the retailer.

Analysts blame the poor results, which compare with a profit of £2.7bn in 2013, on a £4.7bn loss in the value of Tesco’s property holdings, as well as the on-going price war with rivals Sainsbury’s and Walmart–owned Asda, at a time when many consumers are shifting to discount retailers Lidl and Aldi. Trading profit was reported to be £1.4bn.

The poor results come as no surprise to Tesco, which has been struggling to keep up with the kind of business gains it made in the previous 20 years. This is the third straight year of profit decline.

However, there was some good news; fourth quarter like-for-like sales were down 1.2% compared with the same period in 2013, but this compared with a third quarter sales fall of 4.4%. 

Dave Lewis – Chief Executive, 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.

“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.”

In January Lewis announced a restructuring program that would see the closure of nearly 50 stores and halted the opening of planned stores. He also announced that he would be streamlining office roles to cut costs.

Tesco is also under investigation by the Serious Fraud Office for an alleged accounting scandal.