Tesco swings to GBP6.38bn loss in “nightmare” year
- FY loss of GBP6.38bn (US$9.5bn)
- UK trading profit down 79% to GBP467m
- Revenues fall 3% to GBP69.6bn
Tesco said the results reflect a deterioration in the market and an erosion of its competitiveness
UK retail giant Tesco has published what analysts have described as "a nightmare year" after it revealed a significant reduction in UK trading profit, the worst result in its 96-year history.
The loss of GBP6.38bn (US$9.5bn) is Britain’s biggest-ever retail loss and was primarily down to GBP7bn in one-off charges. The bulk was from write-downs on the value of its property portfolio, "reflecting challenging industry conditions and profit decline", Tesco said.
Chief executive Dave Lewis said it had been "a very difficult year" for Tesco, the results reflecting a deterioration in the market and an erosion of its 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," he said.
The retailer pointed to tough trading conditions overseas, especially in Korea, and a "disappointing" performance in Europe.
Tesco has been making changes to its business with the appointment of Lewis, who was brought in to turn around the fortunes of the business.
"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," Lewis said.
UK trading profit in the 12 month period was down 79% to GBP467m, while in Europe profit was down 32% to GBP164m. Asia profit dropped 18.4% to GBP565m.
Revenues in the period fell 3% to GBP69.6bn.
Shore Capital analyst Darren Shirley said of the results: "To say that Tesco had a nightmare year in FY2015 would be an under-statement, an out-turn that would simply have been unfathomable in days gone by. The whys and wherefores of how Tesco reached this somewhat unedifying position have been well documented to our minds, and so perhaps the key take-away for investors from CEO, Dave Lewis', first set of preliminary results should be what of the future."
Lewis acknowledged the remaining challenges in the market and said it is 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."
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