Tesco to warn sales are still falling

Chief executive Dave Lewis to face shareholders for first time, as Tesco tries to recover from £6.4bn loss

Tesco
Tesco could also update shareholders on the sell-off of data business Dunnhumby and its South Korean arm Credit: Photo: Alamy

Tesco chief executive Dave Lewis will face shareholders for the first time at the retailer’s annual meeting on Friday as they look for answers in a year that saw record losses of £6.4bn and an accounting scandal.

Mr Lewis is likely to warn before the meeting that Tesco’s like-for-like sales are still falling by more than 2pc in the UK, despite price cuts and improvements in customer service.

However, Britain’s biggest retailer will point to underlying trends, such as an increase in the volume of products sold, as evidence turnaround plans are making progress.

Tesco could also update shareholders on the sell-off of data business Dunnhumby and its South Korean arm, although it is unlikely to confirm a deal has been agreed. A collection of private equity firms are battling it out for both businesses, with a sale of Tesco’s Korean arm likely to raise more than £4bn. Tim Mason, the former deputy chief executive of Tesco, is understood to be working with private equity firm BC Partners on a bid for Dunnhumby, which is valued at around £1bn.

The annual meeting comes after a dramatic year for Tesco capped by the ousting of chief executive Philip Clarke and an accounting scandal that led to Sir Richard Broadbent resigning as chairman.

Dave Lewis, Tesco CEO

In an attempt to reverse falling sales and to rebuild its balance sheet, Mr Lewis, who was poached from Unilever, has already unveiled a string of drastic measures. He has closed almost 50 shops, scrapped the defined benefit pension scheme, and shut Tesco’s head office in Cheshunt.

Clive Black, analyst at Shore Capital, said Tesco still had it “all to prove”, with sales falling in its Asian business as well as in the UK.

But he added: “We applaud the remedial focus, believing that sound decision-making has taken place, particularly in the important area of pension responsibility and visibility.

“In-store we always felt it would take a lot of time to impose meaningful and discernible change from which trading momentum can sustainably build and this is proving to be the case. Nine months into a 48-60 month project we believe Mr Lewis deserves high marks for his sense of calm and ship stabilisation.”