Newspaper article The Journal (Newcastle, England)

Tesco Showing Signs of Recovery from Its Crisis; FORECAST

Newspaper article The Journal (Newcastle, England)

Tesco Showing Signs of Recovery from Its Crisis; FORECAST

Article excerpt

Byline: GRAEME WHITFIELD graeme.whitfield@trinitymirror.com

TESCO is poised to show that its turnaround plan has stemmed losses and has started to build sales when it posts its annual results on Wednesday.

The City expects the UK's largest supermarket to reveal underlying full-year pre-tax profits down 3% to PS932m, a vast improvement on the 68% fall it reported a year ago.

Taking into account a massive write-down on the value of the supermarket's property portfolio, it posted an overall PS6.4bn annual loss, as the group also saw sales collapse at its core UK business.

However, data last week from respected research body Kantar Worldpanel said Tesco improved its sales for the fourth month in a row, adding that sales slipped by just 0.2% in the 12 weeks to March 27.

This comes after the business reported a surprise 1.3% rise in likefor-like sales over the six weeks to January 9, covering the crucial Christmas period.

Analysts said the supermarket's recent performance is a further sign that chief executive Dave Lewis is turning the massive business around since taking over from previous boss Philip Clarke in September 2014.

The moves marks a welcome improvement after a grim couple of years, with Tesco uncovering a PS326m accounting black hole in autumn 2014 that plunged the group into crisis.

Trading across the sector has been hit amid falling food prices, compounded by a price war sparked by the increasing might of discounters Aldi and Lidl.

Tesco has closed 53 unprofitable stores since the start of its financial year and shelved plans to open a further 49 stores.

Mr Lewis has also cut prices across hundreds of lines, while making a raft of changes such as shutting Tesco's final-salary pension scheme, disposing of its loss-making Blinkbox operation selling online videos, and moving its main headquarters from Cheshunt to Welwyn Garden City in a measure expected to save PS250m.

Analysts at Shore Capital said Tesco "is now operating more on the front foot in the UK". The broker added: "We believe that the major programme of cost reduction set around the mantra of simplification has delivered results that are evident in store. …

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