British retail MNC Tesco plunges into red with £5.74 billion-loss
Britain’s biggest retailer, supermarket group Tesco, announced on Wednesday that it had plunged into a record loss last year as it took a huge writedown on the value of its property.
Tesco, which was hit by a major crisis last October after accounting errors that overstated profits, reported a loss after tax of 5.74 billion pounds ($8.58 billion, 8.0 billion euros) in the 12 months to the end of February. That compared with a net profit of 974 million pounds in 2013/14, the group said in an earnings statement.
“It has been a very difficult year for Tesco,” chief executive Dave Lewis said in the statement. “The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years.” Tesco announced 7.0 billion pounds of one-off charges, mostly linked to a writedown on the value of its property. It also included an impairment of 630 million pounds relating to Tesco’s investment with China Resources Enterprise Ltd in the Chinese
“The extent of the impairments are eye-watering,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers. “In addition, the outlook for the business remains unclear as management seek to spin several plates at once, with focus on such matters as the general restructuring, cost savings and an effort to regain some competitive composure.” In early trading, Tesco’s share price was down 0.45 per cent to 233.70 pence on London’s benchmark FTSE 100 index, which was 0.63 per cent lower at 7,018.63 points.
“Today’s record losses of 5.7 billion pounds may well have been more than markets expected but in a way they are also encouraging, as they signal a determination by management to clean the slate and get on with turning the business around, and drawing a line under a pretty awful last couple of years,” said Michael Hewson, chief market analyst at CMC Markets. Stripping out the exceptional charges, Tesco reported annual pre-tax profit of 961 million pounds, down 68 per cent.