Troubled supermarket chain Tesco has announced its turnaround plan.
Britain’s biggest retailer will slash costs and close dozens of stores so it can lower prices and mend its finances.
It is the start of a fight back from years of market share losses – particularly to German discounters Lidl and Aldi – and a major accounting scandal.
New chief executive Dave Lewis said this was just a start, and that he was looking at further changes without saying what they were. The initial proposals were enough to boost the share price by
Analysts, like Michael Hewson of CMC Markets, believe he will need to do more: “It’s a sad fact of life that when a CEO announces a closure programme, shareholders seem to like that because it shows that the CEO is getting serious. But I think it is still too early to call time on the fact that we are getting a bit of a turnaround story in Tesco’s.”
Forty three unprofitable stores will shut, and plans to open 49 more have been shelved. The company would not say how many jobs would be lost.
Tesco is also scrapping its share dividend for the end of 2014, closing its head office and ending a final salary pension scheme for staff.
However, some analysts think it may need to raise more cash by selling businesses in Asia or eastern Europe and would need deeper price cuts to close the gap on discounters Aldi and Lidl, as well as Wal-Mart’s Asda.