Tesco’s have announced a staggering loss of £6.38bn, but boss Dave Lewis hopes this could draw a close to the grocer’s downwards spiral.

The headlines will tell you that Tesco has just reported the worst loss in its almost 100-year history and one of the largest in UK corporate history, bringing to a close the retailer’s annus horribilis, which has been plagued by scandal and underperformance.

The figures make for dire reading for anyone with a vested interest in the UK’s largest retailer. A statutory pre-tax loss of £6.38bn for the year to the end of February compares with annual pre-tax profit of £2.26bn a year earlier. And annual group trading profit was down 60% to £1.4bn, while full-year like-for-likes fell 3.6%.

It is a shocking fall from grace for Tesco, but chief executive Dave Lewis will hope that the results draw a close to the grocer’s downwards spiral. And in reporting huge one-off charges of £7bn, including a £4.7bn reduction in the value of Tesco’s property holdings, he is attempting to draw a line under the previous leadership’s tenure and move forward on the job of rebuilding the grocer’s fortunes.

Whether this proves to be Tesco’s turning point rests on whether the small but not insignificant return to sales volume growth recorded in the fourth quarter can be maintained.

Lewis was at pains to remind observers that progress would be slow, describing the market as challenging and warning of “increased levels of volatility in short-term performance”.

Yet those who dwell too hard on the financials risk missing the progress Lewis and his new team have made in only a short time in charge, from beginning to rebuild trust among suppliers to improvements in range, availability, service and price perception that have fed through into underlying trading.

And while concerns around the balance sheet and the competitive nature of the grocery sector continue to weigh Tesco down, these remain essential pillars to any future recovery that have been put in place at pace.

Power of the market

If you were looking for an example of how market forces have a canny habit of ensuring the right checks and balances are in place in a robust consumer economy, one need look no further than grocery in the past two years.

The promotions and misleading offers highlighted in a seven-year investigation by consumer group Which? were part of a culture in which the needs of the customer were secondary.

However, the hubristic tendencies that had crept into the industry’s biggest players have been put into rapid reverse by the emergence of the discounters and the way shoppers have flocked to their stores.

The fierce competition for spend that defines the sector means there has never been a better time for consumers.

Consequently this week’s so-called super-complaint by Which? and any investigation that follows will achieve nothing that Aldi, Lidl and the savviness of British shoppers haven’t already forced the sector to address.

  • Chris Brook-Carter, Editor-in-chief