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Tesco reports worst results in 96-year history with £6.4bn loss

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Despite this, Tesco shares have risen, leading some to speculate that investors were feeling Tesco had seen through the worst of it, and should gradually pick up.

Lewis Sturdy, dealer at London Capital Group, though, said that traders would be hesitant about Tesco shares. “Investors have the double-edged sword of what looks like a clear line being drawn under this annus horribilis, while the dividend is cut and uncertainty about is resumption will keep many yield seekers warm.” 

Dave Lewis, the new CEO of Tesco, arrived in the summer of 2014 to help turnaround the company’s fortunes. He had previously been nicknamed “Drastic Dave”, based on a track record of rejuvenating struggling brands at Unilever through big cuts.

Lewis admitted that it “has been a very difficult year for Tesco”, and that the results “reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years”.

He also pointed to the company’s efforts to “draw a line under the past”, and focus on rebuilding, with “early encouraging signs from what we’ve done so far”.

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Tesco reported that like-for-like sales volumes in the UK rose for the first time in over four years, with sales turnover improving in the last three months – a drop of one per cent.

Crawford Spence, of Warwick Business School, said that while the figures were “huge”, they needed to be understood in context.

“They relate mostly to asset write-downs rather than poor trading performance. Underlying trading performance for Tesco has actually not been too bad in recent months. In many ways Tesco has decided to make these losses now rather than later,” Crawford said.

This method of battling through the worst of it now, is Spence suggests, a way for Lewis to focus on as fresh a start as he can manage. “If he gets all the skeletons out of the closet early on, then Tesco will look bad initially, but he will give himself a set of benchmarks that are relatively easy to surpass in the coming years.”

Joshua Raymond, chief market strategist at CityIndex, said that: “Tesco has thrown the kitchen sink in here. This has to be the final throw all the bad news out statement.”

Meanwhile, Primark owner Associated British Foods said that it was “disappointed” following Tesco’s decision to stop selling ABF’s bread brand Kingsmill. This comes among cost-cutting measures, as the supermarket makes an effort to reduce the number of products it stocks. Rival brands Warburtons and Hovis will still be offered.

George Weston, the chief executive of ABF, said he is in talks with the retailer about the decision, and added: “Of course we are disappointed. We want it to be available to consumers everywhere. Tesco is trying to declutter stores and take brands out. That seems very sensible but I think they have made a mistake.”

The morning’s news saw Tesco trending on Twitter, with some mixed responses to the announcement.

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