Belfast Telegraph

Tesco scrap plan for new Belfast store after record £6.4bn loss

Exclusive: It's understood other stores could also be mothballed

By John Mulgrew

Tesco looks likely to scrap plans for an Express store at a former south Belfast pub in the university area which it bought for more than £1m.

It comes after claims the supermarket giant should shut some 200 stores across the UK to help recover from its shocking record £6.4bn losses.

It suffered the biggest ever losses by a UK retailer.

The massive pre-tax losses come amid a difficult year for Northern Ireland's biggest retailer, which closed two stores in east Belfast and one in Ballymena. It also shelved a further two planned for Armagh and Carryduff, along with dozens of others elsewhere in the UK.

But it's understood other stores could also be mothballed - including an Express outlet at the former Elms bar on University Road, which Tesco bought 18 months ago. It could also include another Express store in Castledawson, Co Londonderry, which was awarded planning permission in December last year.

The bulk of the retailer's "eye-watering" £6.4bn losses came about over a huge drop in the value of many of its properties. But taking that out, its profits across the UK still slumped by 79% to £467m for the trading year ending February 28.

It marks the end of a catastrophic year for the supermarket chain in which an accounting scandal, a series of profit warnings and a price war with rivals weighed on results.

But Mike Dennis of Cantor Fitzgerald said Tesco "should consider closing 200 underperforming supermarkets" and focus on those which are profitable. "In addition, this should also allow for £40m of cost savings from the closure of a distribution centre," he said.

The latest Kantar Worldpanel figures for Tesco's market share here showed it took a small drop to 35.2% in the 12 months to the end of March. But German supermarket giant Lidl's sales continue to rise, increasing by more than 15% over the same period.

And Tesco's profit margin is down to just 1% - a drop of 3.9% - as it tries to stay competitive while high-quality chains like Marks & Spencer slice from above and new budget stores bite from below.

The new Tesco boss Dave Lewis was drafted in a bid to turn around the retailer's ailing fortunes, following a series of profit warnings and a price war with cheaper stores Lidl and Aldi.

Tesco's full-year loss is the highest recorded by a UK retailer and is among the top 10 largest by a company in this country.

But it is still eclipsed by the all-time high of £24bn recorded by Royal Bank of Scotland in 2009.

Its results reflect a perfect storm of price wars, store closures, an accounting scandal and management changes.

Responding to the latest results, Mr Lewis said it had been a "very difficult year. The market is still challenging and we are not expecting any let-up in the months ahead," he said.

"When you add to this the fundamental changes we are making to our business and our offer, it is likely to lead to an increased level of volatility in short-term performance."

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Belfast Telegraph