Tesco and their £6.38bn loss
Tesco, as we all know, have been having a terrible time of it, and now they've announced just how awful it has been with a loss of £6.38billion. That's the biggest lost in the company's history. In fact, it is one of the largest losses for any UK business, ever.
One of the factors of this mess was the supermarket's need to cut the prices of a lot of grocery basics, as loads of shoppers ditch the usual retailers in favour of Aldi and Lidl. Add to that, an accounting blackhole and a number of profit warnings, and the whole thing is incredibly bleak.
Of course, Tesco have so much money that even a dizzying loss like this won't put them out of business. Remarkable really. They've also announced that they've got a net debt of £8.5billion and a net pension deficit of £3.9billion.
While all these problems have blighted Tesco, one of the most damaging is the fact that they've been largely irrelevant for some time, in the minds of shoppers. Where the company was once innovative, the past few years has seen the company becoming complacent and treading water. John Ibbotson, of the retail consultants, Retail Vision, said: "This is the official end of the Tesco era. There's a long way to go yet before the agile new Tesco that is emerging becomes a profitable Tesco once again."
"And even when it does recover, it will never again be the force it once was. With this huge loss, the decadent retail dynasty of Tesco has come to an end."
One of the big reasons behind this loss is down to the fact that Tesco had swathes of land which they were going to build new enormoshops on. They decided that they weren't pushing ahead with that and, to the company's dismay, the land was worth much less than they believed. They spent billions on what was going to be over a hundred stores, but sadly for them, people have gone off the idea of shopping in these hypermarkets.
The fact that Tesco are axing thousands of jobs with store closures and losing the head office in Hertfordshire, is also going to cost them around £300m. All the while, Tesco have a Serious Fraud Office inquiry hanging over their heads as well, and an investigation by the supermarket ombudsman.
TOPICS: High Street News