Tesco Profit Hit by Write-Downs

Tesco Profit Hit by Write-Downs

BY KATHY GORDON

LONDON—Tesco PLC on Wednesday counted the cost of years of ambitious expansion under former chief Terry Leahy, as the U.K. supermarket operator's profit for the year was all but wiped out by payments to clean up its domestic business and a charge related to its failed U.S. venture.

Full-year net profit fell for the first time in 19 years, to £124 million ($190.5 million) from £2.81 billion a year earlier. The figure was hit by a £1.17 billion charge on the retailer's failed U.S. chain Fresh & Easy, and a £804 million write-down on property in the U.K.

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17 April 2013
Preliminary Results Announcement 2012/13 Tesco PLC’s Preliminary Results 2012/13 were announced today at 7.00am. View all results materials including full release and Philip Clarke's blog post. Financial highlights £3.5bn trading profit – year-on-year performance largely reflects UK reinvestment Final dividend maintained at 10.13p, giving full-year dividend of 14.76p. Good progress in the UK, delivering improved results – for customers and for Tesco Strong online performance: Group sales of over £3bn for the first time – up 13% Confirming exit from the United States – process well-advanced. F+F brand clothing sales now exceed £1bn in UK alone, with +9% LFL sales growth Clear approach to future growth, capital expenditure, returns and cash, providing clarity for shareholders Philip Clarke – Chief Executive "The announcements made today are natural consequences of the strategic changes we first began over a year ago and which conclude today.  With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers. Our plan to 'Build a Better Tesco' is on track and I am pleased with the real progress in the UK.  We have already made substantial improvements to our customers' shopping experience, which are starting to be reflected in a better performance. We have set the business on the right track to deliver realistic, sustainable and attractive returns and long-term growth for shareholders. The consequences are non-cash write-offs relating to the United States, from which we today confirm our decision to exit, and for UK property investments which we will not pursue because of our fundamentally different approach to space. We have also faced external challenges which have affected our performance, notably in Europe and Korea. Our focus now is on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns." View full release.