Tesco: preliminary results 2014/15

– £1.4bn Group trading profit, in line with expectations
– UK like-for-like sales volumes up for first time in over four years, driven by better availability, service and pricing; like-for-like sales performance improved to (1.0)% in Q4
– Significant reduction in UK trading profit, as previously announced
– Tough trading conditions overseas, especially in Korea; disappointing performance in Europe
– Transformation programme outlined in January progressing well; portfolio review ongoing
– £(7.0)bn one-off charges, predominantly non-cash; includes £(4.7)bn fixed asset impairment, reflecting challenging industry conditions and profit decline
– Pension deficit funding plan agreed with Trustee, comprising cash contributions of £270m per annum
– No final dividend, as previously announced
– Enhanced disclosure, including property valuation/ownership and commercial income
– Reiterating commitment to reinvest any savings or outperformance into further improvements for customers

Dave Lewis – Chief Executive:

“It has been a very difficult year for Tesco. The results we have published today reflect a deterioration in the market and, more significantly, 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.

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. More customers are buying more things at Tesco.

We are making deep changes to the way we organise and run our business, with a simpler, more agile office team, more colleagues serving customers and a new approach to the way we work with suppliers. I do not underestimate how difficult some of these changes have been for the team and I thank everyone for their professionalism and contribution at this time of great change.

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.”