Tesco, the U.K.'s largest retailer by market share, met market expectations by confirming its exit from the ill-fated U.S. Fresh & Easy venture with a 1 billion pound write-off. Delivering its full-year results, Tesco revealed that group trading profit had declined by 13% to 3.5 billion pounds. Sales in the U.K. rose 0.5% from the fourth quarter but were down 0.4% on a cash basis.
Responding to changes in the U.K. retail market, Tesco unexpectedly announced an 804 million pound write-off of U.K. property assets. Chief executive Phillip Clarke commented:
The announcements made today are natural consequences of the strategic changes we first began over a year ago and which conclude today. With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers. ... Our plan to 'Build a Better Tesco' is on track and I am pleased with the real progress in the U.K. We have already made substantial improvements to our customers' shopping experience, which are starting to be reflected in a better performance.
With a market cap of 30 billion pounds, Tesco trades on a prospective dividend yield of 4% and adjusted price-to-free-cash-flow ratio of less than 15. Of course, whether today's 3% share-price decline, the current yield, and the general prospects for U.K. retailing all combine to make Tesco a buy is something only you can decide.
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