Tesco’s annual profits have fallen for the first time in almost two decades, as the UK retail giant confirmed it was at an 'advanced stage' in exiting the US market and closing all of its Fresh & Easy stores.
Tesco’s pre-tax profits for 2012 fell by 51.5 per cent to £1.96 billion, while UK trading profit dropped 8.3 per cent to £2.27 billion. Despite the loss, UK sales have increased by 1.8 per cent to £48 billion over the last 12 months.
In the wake of the results, Tesco CEO Philip Clarke announced a one-off property write down of over 100 of its UK stores with a cost of over £800 million. Tesco last posted a decline in its annual profits back in 1994.
“The announcements made today are natural consequences of the strategic changes we first began over a year ago and which concluded today,” said Clarke, who believes financial losses were always inevitable as a result of the winding down of the retailer’s US operation, which is estimated to have cost £1.2 billion, and last year’s announcement to refresh the format of its UK supermarkets.
Clarke added: 'Big decisions come at a cost, but that won’t deter us from taking them, because they are the right decisions for our long-term success. We feel Tesco in the UK can be better for customers. That's what they want and that's what we're beginning to deliver.'
In other news, Tesco confirmed that its online grocery division had a positive year, with sales up 12.8 per cent to £2.3 billion.
The retailer recently announced an overhaul of its stores'presentation of loose produce,with loose fruit and vegetables set to be sold in brown paper bags throughout UK supermarkets.
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