Tesco Posts Horrific £6.4bn Loss, One Of The Worst In UK Corporate History
Tesco Can Add This Horrendous New Record To Its List
Louise Ridley— The Huffington Post UK/PA
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Supermarket giant Tesco has recorded one of the biggest losses ever by a British company, with a staggering £6.4 billion fall in revenue in the last year.
The dire news came after the supermarket took a massive writedown on the value of its property portfolio.
The pre-tax loss for the 12 months to 28 February caps a disastrous year for the chain, following an accounting scandal when it admitted it overestimated profit expectations by £263 million, a series of profit warnings and a bitter price war with rivals.
The full-year loss was driven by a £7 billion spend on 'one-off' items, including £3.8 billion from a review of its store portfolio in light of industry conditions and declining profits.
Underlying profits plunged 68% to £961 million in the period, but new chief executive Dave Lewis said the company had drawn a line under the past and was seeing some encouraging signs.
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Dave Lewis
Tesco has also agreed a contribution of £270 million a year to its pension fund, after a valuation revealed a deficit of £2.8 billion at the end of March last year.
Tesco's darkest hours
The bomb threat(01 of06)
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In 2001 a blackmailer who called themselves 'Sally' tried to extort £5 million from Tesco by posting parcel bombs to the supermarket's customers.
"Sally" sent letters to Tesco stores threatening to hurt customers if Tesco didn't provide Clubcards which were modified to allow cash to be withdrawn from cash machines.
She sent out several letter bombs, including one which arrived and causing the receiver shock and minor injuries. As the threats escalated, Tesco even began to created the modified Clubcards, but didn't make enough to meet the deadline 'Sally' had set.
Police eventually found out that 'Sally' was Robert Dyer through surveillance on a postbox to which some of the letters had been traced. Dyer was sentenced to 16 years for blackmail and assault, which was later reduced to 12 on appeal. (credit:Bloomberg via Getty Images)
The other bomb threat(02 of06)
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A former tax inspector targeted the supermarket giant in a £1 million blackmail plot in 2007. Phillip McHugh sent 76 letters to Tesco, threatening to bomb stores and contaminate products if it did not give in to his demands for a total of £1 million.
As a precaution, Tesco closed 14 stores in July 2007, leading to loss of around £1.4 million in revenue. McHugh, who was addicted to online gambling and had debts of £37,000, was jailed for six years. (credit:Bloomberg via Getty Images)
The not-so-popular supermarket(03 of06)
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Tesco's UK growth hasn't always been warmly received. Its dominance - at its peak one pound in every seven spent in the UK was through Tesco, though Tesco said last year the figure was more like one in eight.
Resistance from local, smaller shops and fans of independent retail have protested and as Tesco moves into town.
According to non-profit organisation Ethical Network, local communities could be losing inward investment of up to £100bn every year because of supermarket centralisation. (credit:Bloomberg via Getty Images)
When Poland said no to Tesco(04 of06)
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In January this year, an immigration spat between David Cameron and the Polish prime minister led to calls for Jan Bury, head of the the Polish Peasants Party, calling on Poles to boycott Tesco.
He called Cameron's policies "unfriendly and scandalous" and said: "As Poles, we can also say 'no' to prime minister Cameron and his policies. We call on Poles to boycott British retailer Tesco."
In response, Tesco reminded Poland that it employs tens of thousands of people in the country. (credit:Bloomberg via Getty Images)
The worst results in history(05 of06)
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Painful financial results showing a 3.7% drop in like-for-like sales between March and May 2014, marking the "worst trading in their history", according to analysts.
Experts said this could be because of cutting prices to compete with low-price supermarkets like Lidl and Aldi, and trying to appeal to everyone, therefore missing out on specialised markets (credit:LEON NEAL via Getty Images)
The 'mad' bosses(06 of06)
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After June's record poor results, Tesco's senior executives were accused of "arrogance" and being "delusional".
At the supermarket's annual general meeting, they were told they were "arrogant" when Tesco was doing well. One shareholder said: "You're a supermarket. It's not your job to be loved." (credit:ASSOCIATED PRESS)
Tesco boss Lewis said: "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."
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.
Since the arrival of former Unilever executive Mr Lewis, the group has shut its final salary pension scheme and sold its loss-making blinkbox online video operation. It also plans to save £250 million a year by shutting its headquarters in Cheshunt and has axed its dividend this year.
Tesco has also recruited former Dixons chairman John Allan to head its board to succeed Sir Richard Broadbent, who left after the discovery last autumn of a £263 million accounting blunder, now being investigated by the Serious Fraud Office.
Mr Lewis said the company had added a net 4,652 customer-facing roles in stores since September, while cutting the number of head office jobs.