LONDON: Tesco boss Philip Clarke vowed to win back shoppers with millions of pounds of price cuts after a second year of falling profits cast doubt on his efforts to turn around the fortunes of Britain’s biggest retailer.
Despite calls from investors to quit or change tack, with several worried about a price war, Clarke insisted he would see through his “bold” plan to rebuild the company, which had been the darling of the sector during two decades of uninterrupted earnings growth before a shock profit warning in 2012. Tesco shares, at 10-year lows, jumped 5 percent in early trade as Clarke said he would respond to the discount groups and upmarket grocers that have hit Tesco from both sides and sent its British market share to a near 10-year low of 28.6 percent.
One of Tesco’s largest 20 investors was reported on Tuesday as having called Clarke the “wrong person for the job” with the “wrong strategy”.
Another shareholder said the strategy of cutting prices now to compete with increasingly popular discounters Aldi and Lidl was a “shambles”, arguing that with wages improving it should instead focus on improving service.
Tesco, the world’s third-largest retailer, with a market valuation of £23bn and 530,000 staff, has suffered on several fronts in recent years.
Overseas, failed attempts to break into the United States and Japan and troubles in China and Europe have proved a distraction to its home market, where it still makes over two-thirds of sales.
Alongside a 6 percent fall in annual group trading profit posted yesterday, Tesco took a £734m writedown on the value of its European businesses, where trading has slowed, and a one-off charge of £540m in China. That puts charges and writedowns for its overseas forays at close to £3bn in two years.Reuters
