Newspaper article International New York Times

Tesco Sees Bright Side of Pounds 6.4 Billion Annual Loss ; Grocery Chain's Executive Finds 'Encouraging Signs' Even as Its Sales Decline

Newspaper article International New York Times

Tesco Sees Bright Side of Pounds 6.4 Billion Annual Loss ; Grocery Chain's Executive Finds 'Encouraging Signs' Even as Its Sales Decline

Article excerpt

The British retail giant has steadily lost market share in recent years to discount retailers, and it has been in pricing wars with its rivals.

Tesco, Britain's largest grocery store chain, capped a year marred by an accounting scandal, management turmoil and shrinking market share with a whopping loss of 6.4 billion pounds, the food retailer announced on Wednesday.

The loss, equivalent to about $9.5 billion, was the largest in the company's nearly 100-year history, and it revealed damage everywhere: Sales fell; the pension deficit ballooned; real estate assets were marked down; restructuring costs were incurred; and money was paid to cover previous overstated profits.

A year earlier, Tesco's pretax profit was Pounds 2.26 billion.

Dave Lewis, Tesco's new chief executive, has acted decisively to shutter stores, lay off workers and restructure the beleaguered company, but he said on Wednesday that the difficulties would continue.

He also noted a few bright points.

"The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years," Mr. Lewis said in a news release. "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."

More customers, he said, were buying more items at Tesco. But he acknowledged that it would be a long climb back, a sentiment echoed by many analysts.

"To say that Tesco had a nightmare year in the 2015 fiscal year would be an understatement," said the analyst Clive Black of Shore Capital in London.

The company has steadily lost market share in recent years to discount retailers like the German grocers Aldi and Lidl, and has engaged in pricing wars with its British rivals. It has also been mired in investigations concerning a Pounds 263 million overstatement of profit. …

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