Tesco 2015 Annual Report Download - page 5

It was a huge honour for me to be asked to
lead Tesco. It’s a business I had worked with
for 27 years. As a supplier, I always had
enormous admiration for Tesco – its people,
passion, and expertise. So when I was invited
to come in and lead this great organisation,
it was an opportunity not to be missed.
I arrived at a time of significant challenge.
Clearly, for a number of years, the global
retail market has been highly competitive.
We were losing market share in our critical
home market and the growth momentum
we had enjoyed internationally had faltered.
The channel shift to online and convenience
presented both challenge and opportunity,
but the bottom line was that we had stopped
growing.
In addition, or perhaps as a result of this
lack of growth, we had significant internal
challenges. The commercial income issue
identified in September was a significant
blow and has resulted in a SFO regulatory
inquiry. We have been cooperating fully with
the inquiry and as we work on a programme
of change across Tesco, we must ensure this
never happens again.
Alongside these issues is a deeper challenge
of trust. For customers to choose to shop
with us, they have to place their trust in us –
on price, quality, service and as a brand.
But over a number of years, we’ve seen a
gradual erosion of that trust for a number
of reasons. Earning that trust back is
fundamentally important to Tesco. We will
do this not by any quick fix or short term
initiative, but rather by continuous and lasting
changes in what we do and how we behave.
Despite the challenges, at no point during
these first few months has my belief in the
potential of Tesco diminished. As I got to
know the different parts of our business
across Europe and Asia, I have found an
energy and engagement by colleagues
which is incredible – beyond anything I had
expected. That passion to do the right thing
for customers and the expertise to make it
happen still beats strongly within our business.
I am extraordinarily proud of the way that
colleagues have responded to the challenges
we face. The business has started a long
journey of renewal and change. In particular,
the way colleagues from across the business
worked so hard to deliver a fantastic Christmas
showed me the strength and depth of retailing
expertise which exists within our business.
The action we have taken so far has helped
to reset the business and restore our
customer focus. The reality is that it will
require concerted action to get Tesco
back to where it should be.
In this report we are publishing losses
of £6.4bn for 2014/15. These losses were
largely the result of a series of one-off
charges representing our past performance.
They recognise a number of issues: the value
of the property we own has fallen; the cost
of dealing with our excess stock levels and
restructuring costs, as well as the cost of
the retail sites we are no longer developing.
Our reduced trading profit of £1.4bn reflects
the challenges we have seen in the UK and
in our overseas markets.
While these results reflect the difficulties our
business has faced over a number of years,
we are also beginning to see early promising
signs from the changes we have made. By
focusing on the fundamentals of availability,
service and targeted price reductions over
the last six months, we have seen a steady
increase in footfall, transactions and, most
significantly, volumes. Our like-for-like sales
volumes are now up for the first time in four
years. Every day we are seeing our customers
recognise this. Put simply, more customers
are now buying more things at Tesco.
Our task now is to build on this and nourish
these small green shoots of recovery. We
need to continue to listen to our customers
and they will guide us. Tesco became a great
business by putting our customers at the
heart of everything we do and we shall do
that again.
Customers today are hard pressed for
both time and money. They want prices
which are simple and stable, as well as low.
Wherever they shop, they want great choice
and outstanding service which makes their
shopping easier. Above all they want help
to make life a little simpler, every step of
the way.
With our reach, our footprint, our skills and
capabilities, we are perfectly placed to lead
and offer this kind of service. When I look at
our business, I see a sea of opportunity. What
we need to do now is unlock the potential
which exists within Tesco – and to do that,
we need to do some key things differently.
In October, we set out our three
strategic priorities:
1. Regaining competitiveness in core UK business
2. Protecting and strengthening the balance sheet
3. Rebuilding trust and transparency
Dave Lewis
Group Chief Executive
A fresh start
Tesco has always
been a champion for
customers. It’s in our
DNA. The last few years
have been challenging,
but we are confident that
if we get back to doing
an unbeatable job for
customers, our best
days lie ahead.
Visit www.tescoplc.com/ar2015
to hear more from Dave Lewis
3Tesco PLC Annual Report and Financial Statements 2015
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