Tesco is to close 43 UK stores, with the loss of thousands of jobs, as part of a massive cost cutting drive across the business by new CEO Dave Lewis.
Former Unilever man Lewis revealed today that many Express stores will be among those to shut and a further 49 planned stores, most of them Extras, have been canned from its pipeline.
Tesco said it was seeking to slash overheads by 30%, with the moves announced today set to save £250m in the first year alone.
As well as the store closures Lewis revealed plans to drastically reduce Tesco’s product range, with 20,000 SKUs set to be axed as part of a bid to streamline its operations and improve profitability.
Much of the cost-cutting will fall on head office staff, with Tesco’s iconic Cheshunt HQ to close and operations moving to Welwyn Garden City.
The stores Tesco has chosen, said Lewis, were those which were “unprofitable” and where it could see no realistic hope of a turnaround. He refused to name the stores to close, and said a consultation would begin today until May, with informing staff his top priority. Lewis said he has written to the communities with “a heavy heart” to pull out of the projects that have been cancelled.
More closures and pullouts have not been discounted with Lewis describing the situation as a “moveable feast.”
In a momentous day Lewis also revealed that Matt Davies, CEO of Halfords UK, had been appointed as UK CEO for Tesco starting June, and he is expected to spearhead talks with suppliers on a continued drive towards price cuts, following today’s announcement that the retailer was slashing the price of 380 branded products, with more expected to follow.
The restructuring moves overshadowed today’s trading update which showed some signs of improvement in the UK stores’ performance. Tesco’s 2.9% LFL fall in the last 19 weeks was better than the rest of the year and was just a 0.3% fall in the three weeks over Christmas.
Tesco said fresh food was in volume growth for first time in five years after heavy voucher activity and “limited” price cuts, with all UK formats improving LFLs.