Tesco Is Slashing Costs And Dumping Dozens Of Stores To Dig Itself Out Of Its Massive Financial Hole

REUTERS/Lucas Jackson

Tesco's latest trading statement is just out, a crucial update in the company's efforts to dig itself out of its colossal financial hole. 

Tesco announced a £250 million over-estimate in its profits this September, and the situation has since gotten even worse.

As a result Tesco's share price fell by nearly half in 2015, dropping to levels last seen in 2003. They announced like-for-like sales excluding fuel down 2.9 in the last 19 weeks, and down just 0.3% over the Christmas period, better than analysts expected.

It looks like investors are happy so far: Tesco shares opened up more than 5% higher.

The update today is rammed with efforts to scale back the expenditure of the UK's biggest retailer Here's what they're doing to cut costs:

•  Matt Davies, former CEO of  bike and car maintenance store Halfords, is coming in as UK and Ireland CEO. According to The Times he's a former insolvency practitioner, so he's no stranger to massive asset sales.
• Closing 43 unprofitable stores.
• Cancelling 49 new stores.
• No extra investment in payroll.
• Increasing the flexibility of working hours, which they say will cost £300 million this year but save £250 million every year after that.
• Capital investment reduced by more than half, from £2.1 billion to just £1 billion.
• No shareholder dividend for 2014-15.
• The sale of movie streaming service Blinkbox to telecommunications firm TalkTalk for £5 million

Fresh food volumes are up for the first time in five years at Tesco. Here's a chart following the like-for-like sales. Numbers in brackets mean sales are falling, but it's clear that the pace of that drop is slowing:

Investigate.co.uk, Tesco