In its results for the year to end-February, the UK’s largest retailer said the £7bn in impairments included a £4.7bn fixed asset charge, as the group wrote down the value of its property portfolio.
The total loss of £6.38bn compares with analyst expectations of a £3bn-£5bn figure, and represents one of the largest corporate losses in UK history.
Group trading profit, at £1.4bn, was in line with the updated guidance given by Tesco in December, but displays the impact of discounter rivals: the figure is down from £3.3bn the previous year.
The retailer said it had a “strong funding and liquidity position”, contrary to suggestions that it may launch a rights issue to strengthen its balance sheet.
Tesco group CEO Dave Lewis added: “It has been a very difficult year for Tesco. The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years.”
More promisingly, the supermarket said like for like sales volumes had risen again in the three months to the end of February. A 1% quarterly rise represented the first increase in four years, though full year like for likes dropped 3.6%.
Tesco has also agreed a pension deficit funding plan, comprising cash contributions of £270m per annum. It said its net deficit after tax had risen from £2.6bn to £3.9bn by the end of the year, driven by an 80bps fall in corporate bond yields.
Meanwhile, the supermarket’s incoming UK CEO Matt Davies will begin his role on 11 May, earlier than previously signalled.
Lewis will be hoping the figures draw the line under a disastrous period for the supermarket, which saw its share price fall 45% during 2014.
Tesco issued four profit warnings last year, the most notable coming when it acknowledged first-half profits had been overstated by £263m.
The incident, allegedly caused by delaying payments to suppliers, led to the suspension of several executives and multiple external investigations.
Chief executive Philip Clarke, in charge during the period in question, had already been ousted in July following a separate profit warning.
Tesco shares rebounded 25% in the opening weeks of 2015, despite the retailer announcing it would scrap its full-year dividend as part of restructure plans, but the stock has remained flat since that point.
