More price cuts in store as profit slides at Tesco

 
Kasmira Jefford
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TESCO boss Philip Clarke said yesterday he had no intention of leaving as the supermarket giant posted a second year of falling profits and revealed large writedowns across its international businesses.

Dismissing reports that he was under pressure from investors to step down, Clarke said: “I have got no intention of going anywhere. All my waking hours are spent running Tesco. It’s what I love. I am going to see this thing through.”

He pledged to spend more than the £200m outlined in February on cutting prices in response to rising competition from its discounter Aldi and Lidl and to revamp stores in the UK at a faster rate than originally planned.

“We have a big and bold plan, and customers are going to get better value from Tesco during 2014,” he said, refusing to put a figure on the scale of the cuts.

UK trading profits fell 3.6 per cent to £2.2bn in the year to 22 February while like-for-like sales were down 1.3 per cent, widening to three per cent in the fourth quarter – the weakest quarterly sales so far under Clarke’s reign.

However shares climbed two per cent yesterday after group trading profits fell a better-than-expected 6.6 per cent to £3.3bn, thanks to a recovery in some of Tesco’s European markets.

Tesco has suffered in recent years from failed attempts to enter the US and Japan and a costly expansion in China, where it booked a one-off charge in the year of £540m.

It also revealed a one-off charge of £734m relating to a writedown of assets in Europe as the value of its stores fell.

KEY FIGURES IN TESCO’S FULL-YEAR RESULTS

1 £3.3bn Profit

Group trading profits fell six per cent to £3.3bn and by 3.6 per cent in the UK to £2.2bn

2 £238m profit

Europe trading profits fell by 28 per cent to £238m, but this was better than feared thanks in part to improvements in Poland

3 £1.2bn writedown

Tesco booked a one off charge of £540m in China and wrote off £734m in Europe

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