The nation's largest retailer Tesco has reported one of the largest annual losses in UK corporate history.
The company says that for the year ending February it endured a pre-tax loss of 6.4bn. That compares to a pre-tax profit of 2.26bn the year before.
It's by far the worst annual performance Tesco has ever reported and greater than the anticipated 5bn loss. It is also the sixth biggest loss in UK corporate history and the worst ever reported by a retailer.
Tesco actually reported a group trading profit of 1.4bn, although this was still down by 60 per cent. However, these gains were offset by 7bn of one-off charges, a 4.7bn decline in the value of its property portfolio and a decrease of footfall in many stores.
It has been a very difficult year for Tesco," chief executive Dave Lewis said. "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.
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.
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.”
The numbers come following what can be described as an extremely challenging year for the retailer, headlined by an overstatement of profits that is still being investigated by the Serious Fraud Office.
Tesco's share price actually rose this morning on the back of the news, although it has since slipped and is currently down by around one per cent.