Tesco turnover could plunge by £3bn in 2015, predict analysts

Tesco is expected to see annual turnover fall by nearly £3bn in 2015 compared to last year, according to analysts at Shore Capital Stockbrokers, and will not return to 2014 levels until 2017.

Tesco: analysts predict turnover to lose more than £3bn and profits to fall by nearly £2bn in 2015
Tesco: analysts predict turnover to lose more than £3bn and profits to fall by nearly £2bn in 2015

The stockbrokers also forecast that Tesco’s profit before tax will fall from £3.05bn in 2014 to £1.11bn in 2015 and below the billion mark in 2016, to £810m. But the following year will see profits start a slow climb, to £1.33bn in 2017 and £1.68bn in 2018.

The forecast comes the day after Tesco reported better-than-expected results for its third financial quarter, with like-for-like sales down 2.9%, and just 0.3% for the six-week Christmas period.

The beleaguered group also announced drastic cost-cutting measures including 43 store closures and the sale of its Broadband and Blinkbox business to Talk Talk.

Tesco's turnover in 2014 was £63.55bn, but Shore Capital predicts that figure to fall to £60.09bn in 2015, climbing back up in 2016 to £61.78bn and achieving similar levels to last year in 2017, when it hits £63.09bn.

Shore Capital analyst and director Clive Black said that it found Tesco’s trading update "broadly encouraging" but acknowledged that there was "no quick fix" for the supermarket and that Dave Lewis, Tesco’s chief executive, was making "necessary and difficult decisions".

Black added: "In this respect we admired the priority that Mr Lewis placed upon talking to his colleagues following the market announcements on a day when many were placed under uncertainty about their future.

"The customer is almost literally the king in Mr Lewis’s narrative and for good reason. If Tesco does not successfully re-engage, so building like-for-like sales, then margins will not build, cash flows grow and dividends recommence."



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