Tesco has announced a record loss of £6.4bn for the year to the end of February, in what chief executive Dave Lewis conceded was a “very difficult year” for the company.
The loss, of which £4.7bn resulted from the fall in property value of its UK stores, is nearly the biggest in UK corporate history.
UK like-for-like sales excluding fuel declined by 3.6%, although sales grew by 1% in the fourth quarter.
Over the past year Tesco has announced the closure of 43 stores and mothballed plans for 49 new stores. In August it overstated its half-year profit forecast by £263m, prompting an investigation by the Serious Fraud Office.
Lewis said today’s results reflected a deterioration in the market and “an erosion of our competitiveness over recent years”.
“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,” he added.
“Over the last six months we have put customers back at the centre of everything we do. By focusing on the fundamentals of availability, service and targeted price reductions, we have seen a steady increase in footfall, transactions and, most significantly, volumes.”
However, he said the market was still challenging and the company did not expect any let up in the months ahead.
Professor Crawford Spence of Warwick Business School said the figures were “absolutely huge”, but needed to be understood in context.
“They relate mostly to asset write-downs rather than poor trading performance. Underlying trading performance for Tesco has actually not been too bad in recent months,” he added.