Supermarket giant Tesco has slumped to a £6.4bn annual loss after taking a massive writedown on the value of its property portfolio.
The bottom-line loss for the 12 months to February 28 caps a disastrous year for the chain following an accounting scandal and a series of profit warnings amid a ferocious price war with rivals.
Underlying profits were 68% lower at £961m in the period but new chief executive Dave Lewis said the company had drawn a line under the past and was seeing some encouraging signs.
The full-year loss – one of the largest in UK corporate history – was driven by £7bn of one-off items, including £3.8bn from a review of its store portfolio in light of industry conditions and declining profits.
It also wrote down the value of work-in-progress by £925m following its decision in January not to proceed with 49 sites in its property pipeline.
Stores in Amble, Northumberland, and in Stanley and Peterlee, County Durham, will now no longer proceed.
Tesco has also agreed a contribution of £270m a year to its pension fund after a valuation revealed a deficit of £2.8bn at the end of March last year.
Tesco chief executive Dave Lewis said: “The market is still challenging and we are not expecting any let-up in the months ahead.
“When you add to this the fundamental changes we are making to our business and our offer, it is likely to lead to an increased level of volatility in short-term performance.
“Our clear priority – and the one that will deliver sustainable value for our shareholders – is to improve consistently for customers. The changes we have made and will continue to make put us in a stronger position to do this.”