Tesco looks to sell property

Tesco looks to sell propertyRetailer Tesco is planning to sell a number of its non-essential properties as it attempts to improve its financial future.

The Daily Telegraph reports the supermarket chain is looking for a new executive to look at how to raise funds from the sale of non-core property.

Tesco has been forced to issue four profit warnings in the past five months and this has had a significantly negative impact on the company’s share price, as well as raising concerns over its credit rating.

Recently appointed chief executive Dave Lewis has pledged to reassure shareholders with the company’s year-end report in January, which will offer a number of potential money-raising options, including floating the Tesco’s Asian division and selling part of the Tesco Bank operation.

Current accounts estimate the retailer’s property, plant and equipment is worth around £25 billion. This largely includes plots where Tesco had initially planned to open new stores, but now has to revise its expansion plans.

However, it is expected that Tesco would take a major hit on its property portfolio, as seen by rival company Sainsbury’s which was forced to take property writedowns of £628 million last month..

In August S&P put Tesco on notice of a possible negative downgrade of its credit rating.

Analyst at S&P said: “We anticipate that increased competitive and price pressures in the UK from both traditional and discount retailers could suppress any benefits from various management strategies oriented toward improving trading performance.

“Accordingly, we anticipate that Tesco’s profitability will continue to weaken as market competition in the UK remains high, possibly even intensifying over the next 12 months, perpetuating the burden on the group’s business risk profile.”

Barclay Simpson – the number one experts for corporate governance recruitment.ADNFCR-1684-ID-801766296-ADNFCR