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Tesco to close 43 stores despite better Christmas sales | Tesco to close 43 stores despite better Christmas sales |
(35 minutes later) | |
The beleaguered supermarket Tesco has said it will close 43 unprofitable stores across the UK - a "significant proportion" of which will be local convenience shops. | The beleaguered supermarket Tesco has said it will close 43 unprofitable stores across the UK - a "significant proportion" of which will be local convenience shops. |
The firm is also shelving plans to open a further 49 new "very large" stores. | The firm is also shelving plans to open a further 49 new "very large" stores. |
Additionally, Tesco is closing its staff pension scheme, will make cuts of £250m, and reduce overheads by 30%. | Additionally, Tesco is closing its staff pension scheme, will make cuts of £250m, and reduce overheads by 30%. |
Shares in Tesco rose by more than 9% on Thursday, as investors welcomed the company's announcements. | |
It comes after two years of troubles at Tesco, which has suffered falling sales and profit warnings. | It comes after two years of troubles at Tesco, which has suffered falling sales and profit warnings. |
Last year, the company was embroiled in an accounting scandal, and saw the departure of some senior executives. | Last year, the company was embroiled in an accounting scandal, and saw the departure of some senior executives. |
However the retail giant, which has more than 3,300 stores in the UK, had a better Christmas than expected. | However the retail giant, which has more than 3,300 stores in the UK, had a better Christmas than expected. |
Sales over the holiday period were down just 0.3% on the year before, and up 0.1% if fuel sales are included. | Sales over the holiday period were down just 0.3% on the year before, and up 0.1% if fuel sales are included. |
Overall, comparable sales for the three months to the beginning of January were down by 2.9%. | Overall, comparable sales for the three months to the beginning of January were down by 2.9%. |
In the previous three months, sales had dropped by 5.4%. | In the previous three months, sales had dropped by 5.4%. |
Tesco's chief executive, Dave Lewis, said the firm was "facing the reality of the situation," and was "seeing the benefits of listening to our customers". | Tesco's chief executive, Dave Lewis, said the firm was "facing the reality of the situation," and was "seeing the benefits of listening to our customers". |
Tesco also confirmed that two of its businesses - Tesco Broadband and online entertainment service Blinkbox, will be sold to TalkTalk. | Tesco also confirmed that two of its businesses - Tesco Broadband and online entertainment service Blinkbox, will be sold to TalkTalk. |
It also announced that Matt Davies, the boss of Halfords Group, will take charge of Tesco's operations in the UK and Republic of Ireland from June. | It also announced that Matt Davies, the boss of Halfords Group, will take charge of Tesco's operations in the UK and Republic of Ireland from June. |
'Fightback' | 'Fightback' |
Sales at the retail giant improved in the six week Christmas period, with grocery shopping up almost 13% on last year, and online clothing sales growing by more than 50%. | Sales at the retail giant improved in the six week Christmas period, with grocery shopping up almost 13% on last year, and online clothing sales growing by more than 50%. |
Shares in Tesco rose by more than 9% in early trading on Thursday. The firm also confirmed it would not be paying a final dividend to shareholders for 2014/15. | |
"Finally, we are witnessing the beginning of the Tesco fightback," said John Ibbotson, director of retail consultants, Retail Vision. | "Finally, we are witnessing the beginning of the Tesco fightback," said John Ibbotson, director of retail consultants, Retail Vision. |
"Previous management lacked the bottle to do what needed to be done. [Tesco chief executive Dave] Lewis, it would seem, has bottle aplenty. He has taken some tough decisions." | "Previous management lacked the bottle to do what needed to be done. [Tesco chief executive Dave] Lewis, it would seem, has bottle aplenty. He has taken some tough decisions." |
Also among the cost-cutting measures announced on Thursday were plans to close Tesco's longstanding headquarters in Cheshunt, Hertfordshire, and move its main offices to Welwyn Garden City. | Also among the cost-cutting measures announced on Thursday were plans to close Tesco's longstanding headquarters in Cheshunt, Hertfordshire, and move its main offices to Welwyn Garden City. |
The firm also said it was looking to sell Dunnhumby, the data business behind Tesco's Clubcard scheme. | The firm also said it was looking to sell Dunnhumby, the data business behind Tesco's Clubcard scheme. |
No details were given of which stores would be closed, nor of the number of job losses expected. | No details were given of which stores would be closed, nor of the number of job losses expected. |
Analysis: Kamal Ahmed, BBC business editor | Analysis: Kamal Ahmed, BBC business editor |
Mr Lewis will want to be cautious. The last place a supermarket wants to be is trapped on the wrong side of a trend when it comes to whether it should be opening or closing stores. | Mr Lewis will want to be cautious. The last place a supermarket wants to be is trapped on the wrong side of a trend when it comes to whether it should be opening or closing stores. |
Planning and building supermarkets can take years. With the economy improving and real incomes becoming slightly healthier, some believe that in-store shopping could return. | Planning and building supermarkets can take years. With the economy improving and real incomes becoming slightly healthier, some believe that in-store shopping could return. |
Store openings are still a vital route to gaining new customers. Aldi and Lidl are opening shops as fast as they can find the sites. | Store openings are still a vital route to gaining new customers. Aldi and Lidl are opening shops as fast as they can find the sites. |
Read Kamal's full blog. |