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Tesco pre-tax loss plummets to record £6.4bn

Tesco has posted a statutory pre-tax loss of £6.4bn for the year to February 28, as group trading profit plummeted 58.2% to £1.4bn in line with expectations.

The loss was driven by a series of “predominantly non-cash” one-off charges totalling £7bn, the supermarket said.

Group sales excluding fuel were down 3% to £69.7bn.

UK trading profit fell 78.8% to £467m. However, UK like-for-like sales volumes were up for the first time in over four years.

Tesco said it had made progress in regaining competitiveness in core UK business. The restructuring of the UK office and store management is largely complete, while the closure of 43 unprofitable stores was completed earlier this month.

Matt Davies, formerly of Halfords and Pets at Home, will take up his role as UK chief executive of Tesco on May 11, earlier than originally planned.

The company also noted the tough trading conditions overseas, especially in South Korea, and a “disappointing” performance in Europe, where profit fell 31.9% (31.1% on a constant currency basis) to £164m. Profit in Asia was down 18.4% 915.3%) to £565m.

Group chief executive Dave Lewis, who was parachuted into Tesco in September 2014, said: “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.”

He said there had been a steady increase in footfall, transactions and volumes over the past six months.

Lewis continued: “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.”

But he warned of difficult times ahead: “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.”

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