Tesco embarks on restructuring period as profits halve

As the battle of supremacy among UK supermarkets continue, the significant damage from a tough year for Tesco has now been revealed in its half yearly financial report for 2015.

The supermarket chain’s underlying profits the first half of its financial year were £354m, which is a 54.6% loss from last year’s £779m.

Tesco also saw group sales garner just under £24m, which is a decline by 0.3% at constant rates and by 1.9% at actual rates. UK like-for-like sales were down 1.1% in the second quarter, but international sales were up 1%.

In addition, pre-tax profit was £74m, compared with a loss of £19m for the same period last year.

Since the year began, Tesco has closed a total of 53 stores nationwide and significantly reduced the amount of new store openings.

But as the chain begins to restructure operations, Tesco has managed to reduce its debt by £4.2bn, with the sale of its Homeplus stores in South Korea earlier this year. Investment into the restructure of the supermarket is also expected to deliver £400m annual cost savings.

In February, Tesco reported the worst results in its history, with a record pre-tax loss of £6.4bn for the year to the end of February.

Dave Lewis, Chief Executive, said: “In the UK, we continue to improve all aspects of our offer for customers, resulting in volume growth which is allowing us to create a virtuous circle of investment.

“We have concluded our portfolio review with the sale of Homeplus, our business in Korea, enabling us to take a significant step forward on our priority of strengthening the balance sheet. Further progress will be driven by continuing to increase the level of cash generated from our retained assets.”

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