UNITED KINGDOM - Tesco’s sales and profits are slipping, reportedly resulting in a £3 billion (almost $4.5 billion) writedown on the company’s annual results that are due towards the end of this month.
According to The Telegraph, the company’s losses are a result of falling profits, sales, and the closure of more than 40 stores.
Barclays analysts, who are projecting the outcomes of the reports based on the current market and recent financial reports from the company, also caution that Tesco could report a balloon deficit of over £5 billion (about $7.3 billion) as well.
"These issues are widely understood – and impairments are clearly non-cash – but releasing a full set of financial statements may bring more mixed reactions than did January's strategic overview,” James Anstead, analyst at Barclays, told The Telegraph. He also stated that this report will be more balance sheet-focused while January’s report focused primarily on sales trends, cost savings and profit forecasts.
While Tesco competitor Sainsbury's and Morrisons has also reported a pre-tax loss, it is not nearly to the extent of Tesco’s numbers due to the difference in the size of retailers.
According to the report, Tesco’s shares did see an increase, rising to 2.70 as of Friday, possibly due to an increase in grocery sales that took place over the last month. Mike Watkins, Nielson’s Head of Retailer and Business Insight, credits much of this to a shifting grocery industry. Watkins specifically cites retailers Aldi and Lidl’s advertising strategies, who spend the most on advertising, which are helping to change the perceptions and expectations of the UK consumer.
AndNowUKnow will continue to report on this story as it develops, so stay tuned.
