Shares on Tesco rallied today with the announcement of store and job cuts.
Image: Dave Lewis, CEO Tesco PLC
Tesco shares are up over 8% to highs of 200.50, last seen in September 2014 when disaster set in for the major UK retailer. After a year of four profit warnings, the sacking of the majority of its top directors including the CEO and CFO and the infamous £263M accounting misstatement, Tesco is making headway into amending its 2015 balance sheet.
Chief executive Dave Lewis announced a revival plan today and investors appreciated the attempts made by Tesco and rallied on the stock. Tesco was the leader on the UK100 [FTSE100] as the index rose by 0.5% to 6440 by 11.00am GMT.
The plan aims to save £250 million a year and will see 43 unprofitable stores close across the UK, plus moving the Cheshunt headquarters to the Welwyn Garden City office. Overheads will be cut by 30%, which will include an undisclosed amount of job cuts. Capital expenditure will be reduced to £1 billion. A new UK business leader is appointed, Matt Davies, former chief executive of Halfords, and Dunnhumby, the data analysis group that runs its Clubcard loyalty scheme, will be sold off alongside Blinkbox, which will be sold to telecoms group TalkTalk. The decision was also made not to pay a final dividend for 2014/15.
Today Tesco released its Christmas earnings with negative figures across the board so reviving a store where sales over the last 19 weeks have fallen by 2.9% requires a turnaround and Dave Lewis is prepared to cut deep in an attempt to recover.
TESCO TRADING STATEMENT for 19 weeks ended 3 January 2015
MT4 chart: TESCO sees rise of 8% on news of revival plan for 2015
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