Tesco has announced group profit in line with – significantly reduced – expectations in its unaudited preliminary results, announced today, cover the 53 weeks ending 28th February 2015.
UK like-for-like sales volumes were up for the first time in over four years, while like-for-like sales performance improved to 1% in Q4 – yet a pre-tax loss of £6376m, the biggest loss in the company's history, was also noted.
Tesco's aims in this "challenging" market remains to regain competitiveness in the UK, strengthen its balance sheet and rebuild "trust and transparency in the business and the brand".
Dave Lewis, chief executive, comments: “It has been a very difficult year for Tesco. 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.”
Professor Crawford Spence, of Warwick Business School, comments: "These figures are absolutely huge - nearly the biggest loss in UK corporate history. However, they need to be understood in context. They relate mostly to asset write-downs rather than poor trading performance. Underlying trading performance for Tesco has actually not been too bad in recent months. In many ways Tesco has decided to make these losses now rather than later. It all needs to be understood within CEO Dave Lewis's strategy of "taking a bath" in his first couple of years in the job - basically, if he gets all the skeletons out of the closet early on then Tesco will look bad initially, but he will give himself a set of benchmarks that are relatively easy to surpass in the coming years."
An interview with Dave Lewis and CFO Alan Stewart, discussing the preliminary results, is available now to download in video, audio and transcript form here.
