Tesco faces up to worst-ever performance

Tesco has posted its worst-ever financial results, reporting a £6.4bn pre-tax loss for the year to the end of February 2015.

The company said it had been “a very difficult year for Tesco”.

Sky Media last night predicted a loss, but the results have shocked the City after Tesco suffered the biggest ever pre-tax loss by a UK retailer.

The losses include £4.7bn in Tesco’s property values, while stock-related charges and restructuring also hit Tesco’s finances. Like-for-like sales, excluding fuel, were down by 3.6% in the UK, and 4.4% down in Asia. The fall in the value of its stores and tough trading conditions are being cited as the main reasons for the poor results.

The news comes after former Tesco chairman Sir Richard Broadbent stepped down last October due to a gross overstatement of profits totalling £263m.

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.”

Tesco completed the closure of 43 unprofitable stores earlier this month, and Lewis added that major changes were being made: “We have faced into this reality, sought to draw a line under the past and begun to rebuild.

“Over the past 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.”

Investors seemed to be sharing Lewis’ optimism going forward, as shares in Tesco rose as the stock market opened this morning.

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