Tesco, the world’s third-largest retailer, says it will spend $1.6 billion this year to overhaul its underperforming British business and will rein in expansion as it seeks to win back market share and calm nervous shareholders.
With sales down this year, and only a 1.6% rise in pre-tax profits, Tesco has announced a plan to reinvigorate its earnings. Laurie McIlwee is Tesco’s Chief Executive Officer:
“We’ve put together a very substantial plan and it’s one billion pounds of investment in the U.K. this year, incremental to last year. We’ve tested a large part of it. So 200 stores were tested quite robustly through to the end of last year, mainly around improving service and putting more staff into our stores.”
Shares rose 2% after the announcement, but it will take a lot more than that, given the 22% loss over the last six months. It will be at least two years, according to analysts, before Tesco’s stock begin to look healthy again.