Tesco supermarket. (Photo Credit: Mankind 2k/CC BY 3.0)

Tesco faces one of largest losses in British corporate history

British supermarket giant Tesco reports a loss amounting to GBP 6.4 billion (EUR 9 billion) for 2014-2015 up to the end of February, which means its exploitation benefit fell by 60 per cent in a year.

According to market experts consulted by FIS.com, this loss is considered to likely be the result of the ‘fierce competition’ over prices, sparked by the challenge from German discount chains Aldi and Lidl.

“We sought to draw a line under the past and rebuild from here. There are some encouraging signs that what we’re doing is the right thing, but we’re very much at the beginning of a journey,” pointed out Tesco CEO Dave Lewis, Reuters reported.

Tesco informed that its annual group trading profit, which counts sales through the supermarket's tills, was also down 60 per cent at GBP 1.4 billion, compared with GBP 3.3 billion (EUR 1.9 billion) a year earlier.

Meanwhile, several specialized media sources described the loss as “Tesco’s distraction during expensive overseas expansion” and “the retailer’s failure to spot the threat from discounters at home.”

It is also believed that Tesco’s results have been affected by the popularity of local stores that took customers from its huge out-of-town sites.

In addition, BBC News informed that Tesco is still being investigated by the Serious Fraud Office (SFO) after it overstated its half-year profit forecast in August by GBP 263 million (EUR 366.9 million).

Referring to Tesco’s results, Paul Thomas of the retail consultants Retail Remedy considered they are not only one of the biggest losses in British corporate history, "it's a black hole that risks consuming a once all-powerful brand".

He concluded: "To say Tesco's chief executive has a mountain to climb to reverse its decline is to underplay the scale of the task. At times the combative Mr Lewis must feel like an ant scaling the Himalayas."

 
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