Cost cuts, asset sales and writedowns in store for Tesco
By James Davey
LONDON (Reuters) - New Tesco (TSCO.L: Quote) boss Dave Lewis is expected to focus on cost cuts and asset sales when he provides an update on his plans to revive the troubled British grocer's fortunes on Thursday.
Britain's biggest retailer, reeling from an accounting scandal and four profit warnings that halved its share price last year, could also detail substantial property asset write-offs to reflect the diminishing value of large out-of-town stores and development land, analysts have said.
Tesco will also report on third-quarter sales and the key Christmas trading period.
The accounting scandal led to the exit of several senior executives and sparked a series of investigations, including by Britain's Serious Fraud Office, and raised the specter of possible investor lawsuits in Britain and the United States.
Lewis was parachuted in from Unilever (ULVR.L: Quote) in September and said last month that detail on measures to strengthen Tesco's balance sheet and improve its competitiveness would be forthcoming on Jan. 8.
However, he has repeatedly stated that investors should not expect him to lay out a major strategic blueprint for the next three years or put a figure on how many hundreds of millions of pounds he will invest in price cuts to narrow the gap with German discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL] in an attempt to stem its loss of market share in Britain.
With Tesco's debt rated by Moody's at one notch above junk status and under review for further downgrade, the need to shore-up its balance sheet is pressing.
In October Tesco cut its interim dividend by 75 percent and investors expect little or no payout at the full-year stage. Continued...