Tesco set for multibillion loss

Wednesday 22 April 2015

Tesco is expected to report a multibillion-pound annual loss today as it undergoes the latest phase of its shake-up under new boss Dave Lewis.

Britain's biggest supermarket will post its first yearly figures since Mr Lewis was drafted in to turn around its fortunes following a series of profit warnings amid a ferocious price war with rivals.

They are expected to show trading profits falling by 58% to £1.4 billion, their lowest level for more than a decade.

Analysts also foresee billions more being subtracted from the group's bottom line as it writes down the value of its properties by around £3 billion as well as facing up to a pension fund deficit swelling to as much as £5 billion.

Experts at Barclays have pencilled in a statutory pre-tax loss at around £2.9 billion with Shore Capital estimating around £3 billion while some reports suggest losses could be as high as £5 billion.

Shore's Clive Black said: "At a statutory level, it's going to be a horror show. But, for shareholders, it is about Dave Lewis and the future."

Shares fell to a low of 155.4p in December but have since added about 50% as Mr Lewis has laid out a series of major plans to revive Tesco's fortunes.

Bernstein's Bruno Monteyne expects the latest results to show Tesco's decline in sales narrowing in the fourth quarter.

He said: "Dave Lewis has regularly surprised us with how quickly he has moved since taking over: dealing with the accounting crisis, getting Tesco ready for a good Christmas period, starting the cost savings with aplomb."

But the profit numbers will be a far cry from results in recent years which saw Tesco's annual trading profits near £4 billion, before sales went into an alarming slide under Mr Lewis's predecessor Philip Clarke, who departed last year.

Tesco has been caught up in a price war with rivals Asda, Sainsbury's and Morrisons as their market share is gnawed away by discounters Aldi and Lidl.