Wednesday preview: Tesco expected to report annual loss of up to £5bn
Tesco is expected to report an annual loss of up to £5bn on Wednesday following an accountancy scandal and amid fierce competition between the UK’s leading supermarkets.
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If so, it would mark the worst performance in the 96-year history of the grocer. The company had a rocky past year with the discovery that its half-year profits had been overstated by £263m, which led to the ousting of chief executive Philp Clarke. A supermarket price war, sparked by the popularity of rival discounters Aldi and Lidl, has also weighed on margins.
Shore Capital has predicted an annual loss of at least £3bn, saying the focus will be on the strategy of chief executive Dave Lewis to turn things around.
"At a statutory level, its going to be a horror show. But, for shareholders, it is about Dave Lewis and the future,” said Shore Capital analyst Clive Black.
According to reports on Tuesday, Tesco wrote to its 300,000 employees warning that pension benefits may be revised to mitigate losses.
Ruston Smith, the company’s pensions director, sent out a letter seen by The Independent newspaper. The letter is yet to reach staff.
“In January we announced our plans to consult on closing our existing pension scheme and replacing it with a new scheme … These proposed changes would allow us to continue to protect any pension you have already built up and allows us to continue to offer a competitive pension for colleagues in the future,” the letter read.
“We appreciate that this is a significant change, which is why we are committed to listening to your views before any changes are made.”
Citi projects a pension deficit of £4.5bn at year-end. The broker also estimates like-for-like sales in the UK, Asia and Europe to fall 1.1%, 3.3% and 1.3% respectively. It added that it forecasts £1,840m net ‘retail’ operating cash flow, a 50% drop on the previous year.
Wednesday 22 April
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