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Market Commentary

​​Weekly Retail & Leisure News - 27 April, 2015

Tesco reports £6.4bn loss

Tesco reported last week the worst results in its history with a record statutory pre-tax loss of £6.4bn for the year to the end of February. That compares with annual pre-tax profit of £2.26bn a year earlier. It is the biggest loss suffered by a UK retailer and one of the largest in the country's corporate history. Annual group trading profit was also down 60% at £1.4bn, compared with £3.3bn a year earlier as LFLs in the UK excluding fuel declined by 3.6% in the year.

Around £4.7bn of the losses were the result of the fall in property value of its UK stores, 43 of which it said would close earlier this month. Of this £3.8bn is due to cash flow and property values while the remaining £925m is the cost of stalled development projects. Tesco has previously announced that it will pull the plug on 49 development projects. Tesco is still the UK’s largest retailer and has a grocery market share of nearly 30%; Head of JLL UK Retail and Leisure, Tim Vallance, predicts the retailer has the coverage, history, service and quality to fight back.

Additionally, ONS announced last week that UK retail sales fell 0.5% in March on a LFL basis against February’s figures. Despite this dip in the wider market, a number of retailers, including Carpetright, House of Fraser, Pets At Home, Primark and Wickes have all announced positive trading results in the last week.

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