Tesco expected to announce record annual loss
20 Apr 2015
Tesco, the UK's biggest retailer is widely expected to close a disastrous year by announcing a record annual loss, when it releases its results on Wednesday.
Analysts expect the supermarket chain's trading profit for the year to 15 February to drop over 50 per cent to £1.4 billion, from £3.3 billion last year.
However, the bad news is not likely to end there, given the huge uncertainty over the amount Tesco might be forced to write down on the value of its UK stores.
Figures of between £1 billion and £2 billion had been factored in, but Barclays, Tesco's joint house broker, expects the property write-down to be about £3 billion.
Together with pensions and other charges, the distressed grocer would see a net loss of about £3 billion according to Barclays. Other estimates project bigger writedowns taking in the Asian business and the reduced value of stock.
Huge reductions in the value of Tesco's property portfolio are indicative of problems that became apparent last year when decades of expansion in the UK and overseas turned unsustainable with the company issuing a series of profit warnings, eventually forcing the departure of chief executive Philip Clarke.
However, according to some commentators, Tesco's new chief Dave Lewis would be able to show that measures he had initiated to revive the industry giant were beginning to work.
The sales slump in UK stores had slowed, with industry data suggesting it was close to ending a decline in market share. For the past year, Tesco and other UK high-street veterans had faced stiff competition from German discounters Aldi and Lidl. The discounters had benefited from a surge in customers re-evaluating their spending due to financial pressures.
The results, due to be released on Wednesday 22 April, would reveal that Tesco was still hurting from problems of the past year.
Tesco was forced to admit artificial inflation of its first-half profits to the tune of £263 million, termed at the time as "accounting black hole".
Despite Lewis pushing an overhaul at the world's third largest retailer, it would likely announce a trading profit of around £1.4 billion for the year to February, less than half the £3.3 billion made the year before and the third straight year of decline.
