Tesco’s latest trading statement is just out, a crucial update in the company’s efforts to dig itself out of its colossal financial hole.
Tesco announced a £250 million over-estimate in its profits this September, and the situation has since gotten even worse.
As a result Tesco’s share price fell by nearly half in 2015, dropping to levels last seen in 2003. They announced like-for-like sales excluding fuel down 2.9 in the last 19 weeks, and down just 0.3% over the Christmas period, better than analysts expected.
The update today is rammed with efforts to scale back the expenditure of the UK’s biggest retailer. Here’s what they’re doing to cut costs:
- Matt Davies, former CEO of bike and car maintenance store Halfords, is coming in as UK and Ireland CEO. According to The Times he’s a former insolvency practitioner, so he’s no stranger to massive asset sales.
- Closing 43 unprofitable stores.
- Cancelling 49 new stores.
- No extra investment in payroll.
- Increasing the flexibility of working hours, which they say will cost £300 million this year but save £250 million every year after that.
- Capital investment reduced by more than half, from £2.1 billion to just £1 billion.
- No shareholder dividend for 2014-15.
- The sale of movie streaming service Blinkbox to telecommunications firm TalkTalk for £5 million.
See full story on www.businessinsider.my
Image : REUTERS/Lucas Jackson