Tesco has reported a £1.4 billion preliminary full year group trading profit on increased sales.
But it lost a massive £7 billion in writedowns and one-off charges to create a record annual loss of about £6 billion.
In Asia – where Tesco operates hypermarkets in China, Thailand, Malaysia and Korea – group profit fell 18.4 per cent in the year to March 31, to £565 million. But that was a far better performance than in the UK, where profit slumped 78.8 per cent to just £467 million, and in Europe, down 31.9 per cent to £164 million.
In something of an understatement, CEO Dave Lewis described the year as “very difficult”.
“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.”
Indeed, if one could overlook such massive writedowns, the trading news was positive.
UK like-for-like sales were up for first time in over four years, driven by better availability, service and pricing.
Lewis highlighted “tough trading conditions overseas”, especially in Korea.
But he said the transformation program outlined in January was progressing well, the portfolio review ongoing.
“Over the last six months we have put customers back at the centre of everything we do. By focusing on the fundamentals of availability, service and targeted price reductions, we have seen a steady increase in footfall, transactions and, most significantly, volumes. More customers are buying more things at Tesco,” he said.
“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.”
Lewis said the market remained challenging and the company was 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.”
* Image: Tesco Kingston Park by Mankind 2k.
