(MENAFN- AFP) Britain's biggest retailer, supermarket group Tesco, announced Wednesday that it had plunged into a record loss last year as it took a huge writedown on the value of its property.
Tesco, which was hit by a major crisis last October after accounting errors that overstated profits, reported a loss after tax of £5.74 billion ($8.58 billion, 8.0 billion euros) in the 12 months to the end of February.
That compared with a net profit of £974 million in 2013/14, the group said in an earnings statement.
"It has been a very difficult year for Tesco," chief executive Dave Lewis said in the statement.
"The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years."
Tesco announced £7.0 billion of one-off charges, mostly linked to a writedown on the value of its property.
It also included an impairment of £630 million relating to Tesco's investment with China Resources Enterprise Ltd in the Chinese supermarket sector.
"The extent of the impairments are eye-watering," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
"In addition, the outlook for the business remains unclear as management seek to spin several plates at once, with focus on such matters as the general restructuring, cost savings and an effort to regain some competitive composure."
- 'Encouraging' -
In early trading, Tesco's share price was down 0.45 percent to 233.70 pence on London's benchmark FTSE 100 index, which was 0.63 percent lower at 7,018.63 points.
"Today's record losses of £5.7 billion may well have been more than markets expected but in a way they are also encouraging, as they signal a determination by management to clean the slate and get on with turning the business around, and drawing a line under a pretty awful last couple of years," said Michael Hewson, chief market analyst at CMC Markets.
Stripping out the exceptional charges, Tesco reported annual pre-tax profit of £961 million, down 68 percent.
"The market is still challenging and we are not expecting any let-up in the months ahead," added Lewis, who joined Tesco in September.
Shortly after his arrival, Tesco revealed that it had overstated profits by £263 million as a result of accounting errors stretching back to before 2013.
Britain's Serious Fraud Office is probing the accounting blunder at the group, which is the world's third-biggest supermarket chain after France's Carrefour and global leader Walmart.
"It is not possible to predict the timescale or outcome of the SFO investigation, but the SFO could decide to prosecute individuals and the Group, and there is the possibility of fines, or other consequences," Tesco said on Wednesday.
The scandal sparked the suspension of eight Tesco executives and the resignation of chairman Richard Broadbent. Lewis has meanwhile already said he will shut a number of loss-making stores and scrap plans to open more outlets.
The supermarket giant is facing fierce competition in Britain from German-owned discounters Aldi and Lidl, as well as from traditional supermarket rivals comprising Wal-Mart division Asda, Sainsbury's, Morrisons and Waitrose.
Simon Johnstone, senior analyst at Kantar Retail, said: "Tesco's brand is still in need of updating to appeal to UK shoppers who are now being actively courted by the discounters."
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