Britain’s troubled supermarket giant, Tesco, suffered a record loss last year as it took a huge writedown on the value of its property. Tesco, hit by crisis last October after overstating profits in an accounting error, reported a loss after tax of STG5.74 billion (A$11.13 billion) in the 12 months to the end of February. That compared with a net profit of STG974 million in fiscal 2014 and sent its share price plunging by more than five per cent. “It has been a very difficult year fo
r Tesco,” CEO, Dave Lewis, said in a statement on Wednesday.
“The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years.”
Tesco announced STG7 billion of one off charges, mostly linked to a writedown on the value of its property.
There was an impairment of STG630 million relating to a joint investment in the Chinese supermarket sector.
The extent of the impairments was “eye watering”, Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said.
“The outlook for the business remains unclear as management seek to spin several plates at once, with focus on such matters as the general restructuring, cost savings, and an effort to regain some competitive composure.”
Tesco’s share price tumbled 5.15 per cent to finish at 222.65 pence, topping the fallers board on London’s benchmark FTSE 100 index.
Stripping out the exceptional charges, Tesco reported annual pre-tax profit of STG961 million, down 68 per cent.
“The market is still challenging and we are not expecting any let up in the months ahead,” added Lewis, who joined Tesco in September.
Shortly after his arrival, Tesco revealed that it had overstated profits by STG263 million as a result of accounting errors stretching back to before 2013.
Britain’s Serious Fraud Office is probing the accounting blunder at the group, which is the world’s third biggest supermarket chain after France’s Carrefour and global leader Walmart.
The supermarket giant faces fierce competition in Britain from German-owned discounters Aldi and Lidl, as well as from traditional supermarket rivals comprising Walmart division Asda, Sainsbury’s, Morrisons, and Waitrose.
“Tesco’s brand is still in need of updating to appeal to UK shoppers who are now being actively courted by the discounters,” Kantar Retail senior analayst, Simon Johnstone, said.
AFP
