Tesco announces store closures despite better results
Despite reporting better-than-expected sales results, Tesco has announced it will close 43 unprofitable stores across the country.
The fresh food business of Tesco has seen positive growth for the first time in five years, the supermarket announced in its much anticipated third-quarter trading statement.
Total sales were down 0.6%, but this was a marked improvement on its performance in the second quarter when total sales were down 3.2%.
The convenience and online grocery businesses performed well over the Christmas period, resulting in like-for-like sales growth of 4.9% and 12.9% respectively.
The positive news comes after the supermarket has been embroiled in scandal and profit warnings over the past six months.
However, Tesco announced 43 shop closures, a “significant proportion” of which will be local convenience stores. As part of its cost-saving bid, Tesco will also close its headquarters in Cheshunt.
The retailer claimed this restructure would deliver savings of around £250m a year, at a one-off cost of £300m.
Tesco CEO Dave Lewis welcomed the results, but acknowledged that “difficult changes” were being made: “We are seeing the benefits of listening to our customers. The investments we are making in service, availability and selectively in price are already resulting in a better shopping experience. A broad-based improvement has built gradually through the third quarter, leading to a strong Christmas trading performance.
“We have some very difficult changes to make. I am very conscious that the consequences of these changes are significant for all stakeholders in our business, but we are facing the reality of the situation. Our recent performance gives us confidence that, when we pull together and put the customer first, we can deliver the right results.”
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