Tesco: From Troubles to Turnaround

Name: Tesco: From Troubles to Turnaround
SKU: 9B17B004_P

Anupam Mehta; Utkarsh Goyal; Sanchit Taneja

Product #:9B17B004_P

Supplier:Ivey

Discipline:Accounting, Finance, International Business

Setting:United Kingdom, 2016

Details:Case (PDF) • 10 pages • 2017-03-13

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In 2016, Tesco PLC, a leading U.K. retail chain, had undergone tremendous financial turmoil. Profitability had been decreasing since 2013 with heavy losses registered during fiscal year (FY) 2014/15. Net profit had decreased by 304 per cent from 2012 to 2015. However, after the appointment of a new chief executive officer in 2014, Tesco managed to register a net profit of £138 million in FY 2015/16: an astonishing turnaround. Evidently, Tesco was recovering from its losses, but the share price of the company had fallen by more than 20 per cent from 2015 to 2016. What course of action would enable Tesco to maintain and improve its value for shareholders? What areas should the chief executive officer focus on in order to change Tesco’s financial performance?

Learning Objectives

Using this case, students will be able to do the following:

Understand the retail trends in the U.K. supermarket industry
Identify the challenges faced by Tesco
Understand and apply various financial assessment tools and techniques, and conduct a financial ratio analysis
Prepare and review the trend analysis and common size statements to determine the best course of action for Tesco going forward

Tesco: From Troubles to Turnaround

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Learning Objectives