Pressure on Tesco boss Philip Clarke intensified yesterday as the supermarket revealed a worsening decline in UK sales figures.
The retailer also revealed how underlying pre-tax profits fell by 6.9% to £3.05 billion during the year to February 22, while like-for-like sales fell 3% during the fourth quarter.
The chief executive brushed off speculation about his future, despite there being no sign that his £1bn plan to turn around the retail juggernaut is bearing fruit.
Like-for-like UK sales for the year were down 1.4%, with Tesco admitting it had done worse than expected amid increasingly tough competition from rivals and discounters.
“Our performance in the year was not where we had planned it to be,” it said.
It also revealed a one-off charge of £801 million mainly relating to a write-down of assets in Europe, as well as a £540m impairment relating to its Chinese business.
Overall group trading profit was down 6% to £3.3bn, but statutory profit before tax was up 9.8% to £2.3bn after the impact of one-off charges in this year’s and last year’s results.
Mr Clarke said that his previously-announced investment of £200m in price cuts was “just a start” but declined to disclose the scale of any further reductions.
“We have got a big and bold plan and customers are going to get better value,” he said.
Rival Morrisons has said it will plough £1bn into increasing value for shoppers over three years.
Mr Clarke stressed the importance of Tesco’s “refresh” programme of stores upgrades which typically deliver a sales uplift of between 3% and 5% as well as online initiatives, and an ongoing expansion of the convenience stores network.
Shares rose 4% in early trading after the better-than-feared results, and despite static margins and an unchanged dividend, before closing up 2.6% at 293.8p.
The chain’s market share fell more than a percentage point to 28.6% on a year-on-year basis during the first quarter, and it has been rocked by the resignation of finance director Laurie McIlwee in recent weeks.
Analysts at Shore Capital said the results made very disappointing reading, adding that the business “is in a cycle of what seems to be structural decline involving a sustained period of downgrades to earnings.”
Meanwhile, there was embarrassment for Tesco after it was forced to correct an online statement which appeared to warn of a further profits fall during the current year.
A caption introducing the chief executive’s video blog said: “UK profits fell in the last year and are expected to fall again this year.”
But the “honest mistake” was later changed to show the prediction was the view of analysts, after Mr Clarke was quizzed on the apparent admission by journalists.