Tesco has revealed the cost of its spectacular decline with an annual loss of 6.4 billion pounds ($9.5 billion), one of the biggest in British corporate history. As Hayley Platt reports the world's third biggest retailer has also warned there could be more pain to come.
He's been in the job less than a year but already Tesco chief Dave Lewis has earned himself the nickname drastic Dave. Axing the company's private jets was top of his list. And there are plenty more cost savings planned after the world's third largest retailer announced record losses of 6.4 billion pounds - the worst in its history. Kantar Retail's Simon Johnstone. SOUNDBITE: Simon Johnstone, senior analyst, Kantar Retail, saying (English): "Going forward he's going to have to look at simplifying their portfolio of stores and by that it means takeover more ownership of stores. At the moment it owns around 50 percent of freehold stores. That number is going to have to increase and that will help alleviate their financial situation in terms of how much in lease payments they have to make." It wrote 5 billion pounds off the value of its stores. It also revealed it has a pension deficit of 3.9 billion pounds. The problems have been building, an accounting scandal, sliding sales and a brutal price war. And megastores that are simply too big for its needs. SOUNDBITE: Simon Johnstone, senior analyst, Kantar Retail, saying (English): "Anything that is collaborative in nature will help the business, so these third party partnerships we're seeing. Sports Direct is one example, gyms is another or selling off space to the likes of Nandos are things we're going to see more of in these big stores in an attempt to get people back into them." There are already signs of that. Its trading profit was 1.4 billion pounds. And shares were up slightly, adding to an overall recovery in its share price this year says Robert Cole of Reuters BreakingViews. SOUNDBITE: Robert Cole, Reuters BreakingViews, saying (English): "You may have noticed shares were up 45 percent this year, that's a big jump which seems to suggest that the market has taken it for granted that not only has Tesco stopped the rot it will somehow go back to it's glory days." Lewis isn't making any promises though. He admits there's still a long way to go and plenty of work to be done. One thing's for sure he'll need time and the trust of Tesco's investors.