Tesco profit declines for second year as UK sales worsen

Tesco, Britain's largest retailer, reported a second consecutive decline in annual earnings after a slump in domestic sales and said it wrote down the value of assets in Europe amid deteriorating profitability.

So-called group trading profit fell 6 per cent to £3.32 billion (HK$43 billion) in the year to February 22, the supermarket company said, compared with the £3.23 billion average estimate of 13 analysts.

The grocer also said fourth-quarter same-store sales dropped 2.9 per cent in Britain excluding petrol, the most since chief executive Philip Clarke took office three years ago.

With Tesco shares languishing near a 10-year low, the results will increase the pressure on Clarke as he struggles to convince investors he can revive the British business, which accounts for three-quarters of sales, and seeks to unravel unprofitable international ventures.

Tesco said it wrote down the value of its European assets by £734 million and its discontinued operation in China by £540 million.