Signs of a recent improvement in trading at Tesco were not enough to prevent a slide in the supermarket giant’s shares as it racked up record annual losses of £6.4 billion.
Chief executive Dave Lewis sought to draw a line under the beleaguered retailer’s recent troubles by taking £7bn worth of write-downs, including more than £4bn on the carrying value of its property portfolio.
Shares ended the day down 12.1p at 222.65p – a fall of 5.2 per cent – even though like-for-like sales improved in the final quarter of the year and Lewis said efforts to improve the offer for customers had put the business in a stronger position.
Joshua Mahony, market analyst at IG, said Tesco’s results “hammered home the drab tone” in London, where the FTSE 100 Index finished the session 34.69 points lower at 7,028.24.
Mahony added: “With the UK’s biggest supermarket failing to cope with increased price competition from low-cost producers like Lidl and Co-op, Dave Lewis has a big job on his hands to steer this tanker back on course as soon as possible.”
The gloomy reception for Tesco’s results saw smaller rival Morrisons drop 8.1p or 4.1 per cent to 190.4p, while Sainsbury’s was down 10.2p at 263p – a decline of 3.7 per cent.
Other big fallers included Hargreaves Lansdown after broker Jefferies cut its target price and removed its buy rating on the financial firm. Shares fell 36p, or 2.9 per cent, to 1,198p.
Engines maker Rolls-Royce was the biggest riser in the FTSE 100, gaining 41p or 4.1 per cent to 1,048p after it named Warren East as its new chief executive. He is to replace John Rishton who is standing down after four years at the helm.
East is the former boss of chip developer Arm Holdings, which ended the trading day 6p higher at 1,201p.