Britain's supermarket giant Tesco reports massive £6.4 billion loss

LONDON (Reuters, AFP) - Tesco posted an annual loss of £6.4 billion (S$12.88 billion) on Wednesday, the worst in its 97-year history, after shoppers deserted Britain's biggest retailer, forcing it to write down the value of its stores.

Hurt by an accounting scandal and sliding sales due to pressure from discounters and a brutal price war, the supermarket wrote down the value of its stores by £4.7 billion. The statutory loss, which also includes restructuring charges and stock writedowns, is one of the biggest in British corporate history.

"The market is still challenging and we are not expecting any let up in the months ahead," new Chief Executive Dave Lewis said.

Tesco's trading profit was £1.4 billion, in line with company guidance but less than half of the £3.3 billion made the year before and a third straight year of decline. The supermarket giant is facing fierce competition in Britain from German-owned discounters Aldi and Lidl.

The firm also revealed it had net debt of £8.5 billion and a net pension deficit of £3.9 billion. It has agreed to pay £270 million per year into the scheme.

Tesco's property writedown follows similar moves by rivals Sainsbury's and Morrisons and reflects the deterioration in UK grocery market conditions in recent years. It is on top of about £4 billion of charges Tesco has taken over the last three years.

The group said trading conditions had also remained tough overseas where trading profit in Asia and Europe fell 15.3 per cent and 31.1 per cent respectively.

Shortly after Lewis' arival, Tesco revealed that it had overstated profits by £263 million as a result of accounting errors stretching back to before 2013.

Britain's Serious Fraud Office is probing the accounting blunder at the group, which is the world's third-biggest supermarket chain after France's Carrefour and global leader Walmart.

The scandal sparked the suspension of eight Tesco executives and the resignation of chairman Richard Broadbent. Lewis has meanwhile already said he will shut a number of loss-making stores and scrap plans to open more outlets.