Tesco's Dave Lewis is playing tough and facing up to the reality of £6.38bn losses

Financial Services

April 22, 2015

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2-3 minutes

Tesco's Dave Lewis is playing tough and facing up to the reality of £6.38bn losses

You can't make an omelette without breaking eggs, says Kate Jones, brand consultant and retail watcher, and Dave Lewis, Tesco CEO is certainly not afraid to do just that.

Tesco has posted its biggest ever loss but Dave Lewis is making the right moves

In less than one year in his role, Dave Lewis’ vision and decisive actions have made many a headline and it looks like there will be more to come as he puts his turnaround plan into action.

Dave Lewis’ vision and decisive actions have made many a headline and it looks like there will be more to come as he puts his turnaround plan into action

Today, Tesco posted the biggest loss British retailing has ever seen, with a whopping £6.38bn reported – a marked change from last years pre-tax profits of £2.26bn.

Deadwood

This is due to clearout of the deadwood - a series of one-off write-downs, totalling £7bn. The majority of this lies in the declining value of the property portfolio – accounting for around £4.7bn of the total loss. The retailing landscape is rapidly changing and Tesco’s empire has become less fit for purpose as footfall declines in large, out-of-town superstores. This point was made clear last month when the closure of 42 stores was announced, with rumours of more to follow.

Dave Lewis himself has said it has been ‘’a very difficult year for Tesco’’ with ‘’challenging industry conditions and the decline of profit over the last year’’.

He is doing the right things

The important thing to note is that this is all by design and not misfortune. Mr Lewis is not sitting back panicking at the helm of the Titanic, he is deliberately setting his stall out and delivering his turnaround plan for the Tesco of the future. This is a CEO who wants to ‘’put the consumer at the heart of the business’’ and so far his actions have demonstrated just that. He is doing the right things.

Everything he has done to date has been very public, very transparent and very honest

Everything he has done to date has been very public, very transparent and very honest – from the expose of profit misreporting last year, suspension and investigation of several senior staff members, to the selling off of the company jets, rethinking the way business is done with suppliers and putting more staff in stores. It is apparent that this is a CEO who really understands what the public wants – and it is working too as Mr Lewis has been able to report ‘’a steady increase in footfall, transactions and volumes – more customers are buying more at Tesco.’’

Annus horribilis

Get this right and shareholders will benefit in time too. In fact Tesco’s share price rose by more than 1% in early trading when the City woke up today and HSBC remains bullish, giving shares a ‘buy’ rating. So, despite this annus horribilis, things really are looking up.

Dave Lewis is determined to make Tesco great at retailing again and he is doing it in a very human way that is winning the hearts of the customers as well as the heads of the city. He is singlehandedly changing the Tesco philosophy forever and this will doubtless be his legacy. The empire may be crumbling but the new era is upon us and is being led by a much awaited supermarket superhero.