Belfast Telegraph

Tesco cancels plans to open stores in Carryduff and Armagh

New boss Dave Lewis has meanwhile announced 43 store closures across the UK

By Claire Cromie

Tesco is cancelling its plans to open new stores in Carryduff and Armagh.

The news comes as the supermarket giant's new boss Dave Lewis wielded the axe, announcing 43 store closures across the UK.

Tesco has not released a list of the 43 existing stores to close - but confirmed plans to open supermarkets in Carryduff and Armagh have been aborted.

Construction is underway in Armagh, where Turkington is contracted to build the shell of the retail unit. This will continue and is due to be completed in April.

The Carryduff store had received planning permission but building had not started.

Northern Ireland Independent Retail Trade Association chief executive Glyn Roberts welcomed the news the stores would no longer be going ahead.

"Our members locally had expressed concerns about the impact both superstores would have on local trade," he said.

"Northern Ireland passed the multiple supermarket saturation point a number of years and the market was not simply there to sustain the sheer volume of new stores”

"There have been big changes in the grocery retail landscape with a big drop in consumers doing the ‘big’ weekly or fortnightly shopping trip. Shoppers are increasingly grocery shopping every three to four days and using local independent stores and discounters."

Mr Roberts added: "Local independent retailers are raising their game to provide better prices, even higher level of customer service and offer something different to the same old multiple supermarkets

"The retail market is undergoing the biggest change in its history and the key challenge for independent and multiple retailers is to show innovation and embrace that change."

Meanwhile however, thousands will be left fearful for their jobs in the closure of unprofitable sites across the UK.

Tesco will also abandon its headquarters in Cheshunt, Hertfordshire, in 2016 after more than 40 years.

Staff at Britain's biggest supermarket will also be hit by the closure of the group's final salary pension scheme.

Dave Lewis said: "We have some very difficult changes to make. I am very conscious that the consequences of these changes are significant for all stakeholders in our business but we are facing the reality of the situation.

"Our recent performance gives us confidence that when we pull together and put the customer first we can deliver the right results."

The update cheered the City, sending shares up 10% - despite a final dividend for the year being cancelled - as Tesco revealed that like-for-like sales over the key Christmas period fell by just 0.3%.

It was a marked improvement on earlier declines and much better than City forecasts.

Shares had fallen by more than 40% over a nightmarish 2014 which saw a string of profit warnings, the departure of Mr Lewis's predecessor Philip Clarke, and a £263 million accounting scandal - being probed by the Serious Fraud Office.

Tesco also said today it was selling its broadband business and its UK download brand Blinkbox to TalkTalk, in a deal understood to be worth £5 million. It has asked Goldman Sachs to explore options for its dunnhumby retail data business.

The group has named turnaround specialist Matt Davies, currently boss of Halfords, to lead its UK and Ireland business from June.

It also plans to slash capital spending to £1 billion for the next financial year, the same as it spent in the first six months of 2014/15 and less than the £2.7 billion invested in the 2013/14 financial year.

Meanwhile, Tesco fired the latest salvo in the new year supermarket price war by cutting the cost of hundreds of branded products by around a quarter. It follows price-cutting announcements by rivals Asda and Sainsbury's in the last few days.

HSBC analyst Dave McCarthy said: "This is a positive statement in many respects.

"It shows sales momentum is turning, that Dave Lewis will make bold decisions on all areas of the business, that the balance sheet is being strengthened, that management has been strengthened and that there are no sacred cows with the closure of the Cheshunt head office. It is hard to imagine much better news today."

But the Usdaw union said it was a "worrying and difficult time" for its members and that it had arranged meetings to begin discussions on Tesco's plans.

Tesco is not yet disclosing the locations of the 43 stores to close but Mr Lewis revealed that a "significant proportion" would be its Express convenience shops.

The sites will be spread across the country. The chief executive would not give any guidance on the scale of the jobs to be lost or whether they were likely to be in the thousands. Head office jobs will also see cuts as overheads are slashed by 30%.

Employees will start to learn over coming months where the axe will fall as Tesco begins consultations with those affected with full details set to be known by April.

The chief executive, who took over in September confronted by the worst sales performance for Tesco in four decades, said the decisions he was taking today were "never easy".

He said: "It is a great business that's come under intense financial pressure and we are trying to reinvigorate the model and address financial challenges."

Mr Lewis was upbeat on Tesco's trading performance over the festive period as sales declines eased. He paid tribute to the "exceptional job" done by staff.

The trading update showed like-for-like sales fell 2.9% in the 19 weeks to January 3, including a 4.2% fall in the third quarter to November 22, narrowing to a slide of 0.3% for the subsequent six weeks. It compared to a 5.4% fall in the second quarter.

It comes after Mr Lewis - who took temporary charge of the UK business from last month - decided to boost store staff numbers over the Christmas period and improve product availability.

He said: "We are seeing the benefits of listening to our customers. The investments we are making in service, availability and selectively in price are already resulting in a better shopping experience.

"A broad-based improvement has built gradually through the third quarter, leading to a strong Christmas trading performance."

In the six-week period, Tesco also saw improved online sales, with grocery home shopping up 12.9% and clothing up 52.4%. An increasing proportion of online grocery shopping was done through click-and-collect.

Black Friday promotions at the end of November saw Tesco Direct - the home of its range of electrical appliances - record its highest week of sales on record

Tesco said like-for-like volume growth in fresh food was positive over Christmas for the first time in five years. Meanwhile convenience store sales grew 4.9%.

The group said its central restructuring will result in savings of £250 million.

Mr Lewis said the decision to concentrate head office operations in Welwyn Garden City and close Cheshunt - where it has had its headquarters since 1973 - had involved "soul searching".

The closure of Tesco's final salary pension scheme comes after its deficit swelled to £3.4 billion. It costs the company £500 million a year and has 350,000 members, of whom 200,000 are current employees.

Meanwhile the future for its overseas operations looks uncertain, with Mr Lewis only saying Tesco is committed to them "until we make any decision otherwise".

Total sales in Asia fell 1.5% over the 19-week period to January 3 while they rose by 0.4% in Europe.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: "Tesco has delivered ground-floor numbers against basement expectations. Perhaps, at last, there are some glimmers of light at the end of the tunnel."

City analyst Louise Cooper said: "Mr Lewis is doing the right things. The question is whether he can do them fast enough and before Aldi and Lidl get entrenched."

Tesco employs more than half a million people including 310,000 in the UK where it has more than 3,300 stores.

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