As Tesco continues to suffer from the fallout created by the supermarket price war and the write down in value of its UK property values, Chief Executive Dave Lewis has to make a series of increasingly tough decisions to return group finances to the black. This week, the group has announced that its remaining six Homeplus stores will be forced to close in the coming weeks, leading to the loss of around 450 jobs.
The portfolio of 12 Homeplus stores were originally introduced in 2005, when then-chief executive Terry Leahy made the decision to trial non-food stores as part of the group’s rapid expansion which created the phenomenon known as “Tesco Towns”.
However, in the current climate, six of the original stores were deemed too costly to run during the last review as none managed to make a profit before rent was taken into account, leading them to be included in the 43 store closures announced by Mr Lewis earlier this year.
While it was hoped the remaining stores would manage to turn around as consumer spending rose, none are deemed profitable enough to be a valuable asset to the group. Therefore, the remaining locations in Bracknell, Bristol, Bromborough, Denton, Nottingham and Preston will soon close their doors for good.
A spokesman for the supermarket chain expressed a hope that the 450 staff members due to lose their jobs will be able to find work elsewhere in the Tesco network.
He said; “We’ve taken the difficult decision to close our remaining six Homeplus stores.
“Our priority is now to explain what this announcement means for our colleagues and wherever possible, offer them alternative roles with Tesco.”
The write down in Tesco’s property values to the tune of £4.7 billion was a massive contributor to the group’s worst ever performance. Last month, the group was forced to reveal a pre-tax loss during the last financial year of £6.4 billion, which will go down in history as one of the greatest losses in British corporate history.
While Tesco’s supermarket outlets will continue to sell non-food items such as furniture, electrical goods and clothing, the loss of the six Homeplus stores will be seen as a major blow for the chain at a time when executives are insisting the turnaround plan currently being implemented by Dave Lewis is beginning to bear fruit.
And with Aldi and Lidl both continuing to grow market share whilst upmarket Waitrose squeezes from the opposite end of the scale, it seems that Tesco’s problems may only just be beginning to intensify.