British grocery chain Tesco on Wednesday reported its worst full-year results ever, with losses of £6.4 billion for 2014-15, although there are indications of a possible turnaround.
While the company struggles to deal with disastrous global sales results, CEO Dave Lewis has been pushing to reform the company after disclosing in September that it overstated profits by £250 million ($US327 million), Business Insider Australia said.
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Tesco started in 1919 as a market stall in East London run by Jack Cohen, who expanded it into a cluster of stalls and then a wholesale business. By 1934, he had opened a food warehouse in North London for his stores.
Tesco listed on the London Stock Exchange in 1947, and a decade later Cohen launched Tesco’s first large, self-service supermarket. In the late 1950s and early 1960s, the company purchased more than 500 new stores, and his company’s market share eventually surpassed Sainsbury’s, the report said.
In recent years Tesco opened stores in China, South Korea, India, Malaysia, and across the EU, vaulting it into a tie with Carrefour of France as the world’s second biggest retailer. However, it accumulated a huge amount of floor space and land, with the anticipation of expansion that never happened.
Signs of difficulty emerged in 2013 when Tesco reported its first drop in profits in 20 years, and the company decided to exit the US market. The following year, it announced that £250 million in profits had vanished.
Tesco is still the UK retail market leader, but that position is under threat. It is still the country’s biggest supermarket and Europe’s largest private employer. The supermarket’s market share in Britain has fallen to 28.4%, down from the 30.1% it had in 2012, Business Insider said.
However, Tesco has been catching up with the industry in terms of sales growth, and is no longer losing significant market share, according to analysts from HSBC. They say that Tesco is better-positioned to perform than the other major supermarkets because of its size.
Meanwhile, Sven Reinke, vice president and senior analyst for Moody’s, said, “We see early signs of improvement in Tesco’s operating performance, driven by growing sales volumes resulting from its measures around service, availability and price. However, we do not expect a material increase in Tesco’s underlying operating profitability in the 2015/16 fiscal year.”
