Dave Lewis, the man tasked with turning Tesco's fortunes around, says the company can still succeed despite the growth of budget rivals.Read the full story ›
Tesco remains a "very strong business" and is doing the "right things" in working towards a recovery despite today's announcement of massive losses, an independent analyst has told ITV News.
Richard Perks, head of retail research at Mintel, pointed to recent positive signs, such as an increase in like-for-like sales in the final quarter, as a sign that new chief executive Dave Lewis was already turning the supermarket's fortunes around.
"I think they have acted impressively, really, to bring people back into those stores and shopping again," he said.
Tesco boss Dave Lewis says the supermarket's trading profit could fall further in the coming year as it makes further investments to turn around its fortunes.
The £1.4 billion trading profit was more than halved in 2014/15 after what Lewis described as a "very difficult year", and Lewis said maintaining even that level of profit was not "without its challenges".
Our aspiration is to maintain the profit level at what it was last year but you should understand that if we feel we have to make further investments to keep the momentum of the business going ... we would.
Prior to today's update, analysts said they expected Tesco to post a trading profit of around £1.48 billion in 2015/16.
Tesco's £6.38 billion losses were driven by £7 billion in one-off charges.
Among the major contributors to that figure were:
- £3.8 billion: A review of its store portfolio in light of industry conditions and declining profits
- £925 million: A write-down in the value of work-in-progress, after decision to axe 39 new stores
- £270 million: Yearly contribution agreed toward pension fund after valuation revealed £2.8 billion deficit
- £416 million in restructuring costs
Tesco is undergoing a turnaround plan under new chief executive Dave Lewis, who took over from Phillip Clarke in August last year.
Tesco chief executive Dave Lewis said the supermarket had endured a "very difficult year" as it reported the biggest annual loss in its 96-year-history.
The supermarket's massive losses came after an accounting scandal, a ferocious price war with rivals and a series of profit warnings - all of which followed a major write down on the value of its property portfolio.
"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."
Despite the heavy losses, Tesco saw a small increase in its UK like-for-like sales for the first time in more than four years during the final quarter.
Supermarket giant Tesco has reported a bottom-line loss of £6.38 billion for the year to February 28.
The loss by Britain's biggest supermarket could be one of the largest ever reported by a UK firm.Read the full story ›
Tesco is facing a multi-million pound compensation claim from shareholders over last year's accounts scandal.
The supermarket giant’s announcement in September that it materially overstated its profits caused a crash in its share value.
A non-profit organisation under the name Tesco Shareholders Claims Limited said:
A permanent destruction of value has occurred and had the accounting irregularities not taken place the share price, and value of the company, would today be materially higher.
TSC expects the claim to be in the region of 50p-70p per share. Tesco Plc has in excess of 8 billion shares listed.
Tesco has said it is "committed" to reducing the food poisoning bug campylobacter in poultry.
"Providing safe food is always our absolute priority," a Tesco spokesperson said.
"Whilst there is no simple solution to prevent its presence in raw poultry we have and will continue to work in close collaboration with our suppliers, scientists and relevant industry experts to make solid progress to tackle the problem at all stages of the supply chain."