City bracing itself for steep fall in profits at Tesco

TESCO boss Dave Lewis will continue to bear down on costs this week as the supermarket major delivers a steep fall in annual profits.

Dave Lewis. Picture: Getty

The City is braced for Britain’s biggest grocer to post an underlying profit down 65 per cent to £1.07 billion after a string of profit warnings, an accounting scandal and the loss of sales and market share to aggressive discount rivals Aldi and Lidl.

At the bottom line, Tesco is expected to report big losses due to a one-off hit of up to £3bn on the diminished value of the firm’s property estate.

But the group saw sales grow by 0.3 per cent, giving it a 28.4 per cent market share in the 12 weeks to 29 March, according to Kantar Worldpanel data, and the retailer lifted sales by 1.1 per cent in the quarter before that.

Sliding sales at the retailer saw chief executive Phil Clarke replaced by Unilever executive Lewis last September in a bid to restore the fortunes of the supermarket’s core UK business.

In January, Tesco published the location of 43 loss-making stores that will close, and shelved plans to open a further 49 stores. It has also cut prices across hundreds of lines. Other changes under the new boss include shutting Tesco’s final salary pension scheme, disposing of its loss-making Blinkbox online video operation and relocating its HQ. It will also not pay a final dividend this year.

The City will look to see if Lewis intends further disposals in Asia and whether he will sell dunnhumby, the £1.5bn-rated company that launched the Tesco Clubcard in 1994 and led to loyalty schemes sweeping through the industry.