Tesco bins development on more than 100 sites
Tesco has announced that it no longer plans to develop on more than 100 sites where it has bought land, as part of a property pipeline review
Tesco announced last year it would reduce new store openings by a third and cut capital expenditure by £500 million in 2013.
According to the AJ’s sister title Construction News, the supermarket giant outlined the results of its in-depth review of the property pipeline in a trading update this morning (17 April). It is unknown at this stage which schemes will be ditched, however the AJ can confirm that the site once earmarked for Mangera Yvars’ scrapped supermarket in Nottingham is among those being offloaded.
Earlier today Tesco reported group trading profit down 13 per cent to £3.5 billion in its full year to February 23.
It said: ‘We have reviewed all of the schemes included in the pipeline individually, assessing their viability and potential to deliver an appropriate level of return on capital employed if built out.
‘As a result, we have identified more than 100 sites – the majority of which were bought between five and ten years ago, at a higher point in the property cycle – which we no longer plan to develop and have therefore written their values down.
‘In addition to a number of other provisions, including for the impairment of schemes which still can deliver an attractive return, but one lower than originally anticipated, this has led to a total one-off UK property write-down of £804million.’
Chief executive Philip Clarke said: ‘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.’
He added: ‘We have set the business on the right track to deliver realistic, sustainable and attractive returns and long-term growth for shareholders. The consequences are non-cash write-offs relating to the United States, from which we today confirm our decision to exit, and for UK property investments which we will not pursue because of our fundamentally different approach to space.’
Explaining which sites would be offloaded a Tesco spokesman said: ‘The write-down includes a mix of sites. From sites where we have been unsuccessful through planning, to locations where we have decided not to extend existing stores. It also includes mixed use developments where we have decided not to proceed or where our current scheme is smaller than we originally proposed.
‘Where we have decided against progressing proposals we continue to work with local authorities to find alternative uses for these sites. We remain proud to work with councils and communities across the UK as we continue to invest, create jobs and deliver new stores to our customers.’