Tesco has revealed a pre-tax loss of £6.4 billion for the year to the end of February, one of the largest in UK corporate history.
In the previous year, the supermarket giant made an annual pre-tax profit of £2.26 billion but the losses seem to be a big challenge for Tesco, giving them the worst results in its history.
About £4.7 billion of the losses that were made were the result of the fall in property value of the UK stores, with 43 of those said to close earlier this month. The decrease in value of Tesco’s property portfolio was because of the declining footfall in many of the out of town superstores.
This year has proven difficult for Tesco who are still being investigated by the Serious Fraud Office (SFO) because it overstated its half-year profit prediction in August by £263 million.
Compared with £3.3 billion the year before, annual group trading profit was down by 60% at £1.4 billion. This counts any sales through the supermarket’s tills.
Excluding fuel, UK like-for-like sales declined by 3.6% in the year and the company said the disappointing performance of its European stores is due to other competition. Stores in Ireland faced the biggest sales fall of 6.3% in the year.
Sales also fell in South Korea, Thailand and Malaysia. Tesco said trading profit in Asia was £565 million but once currency fluctuations were stripped out, this resulted in a 15.3% lower result than a year earlier because of the falling sales in other countries.
The only positive reaction to this was from investors who celebrated Tesco’s share price, which rose by more than 1% in early trading on the London Stock Exchange to 237.8p, however it will probably be a rollercoaster day for the company as the news sinks in.