Overview

The case study focuses on Tesco, a retailer situated in the United Kingdom, and its transformation
from financial difficulties to a substantial recovery. The company, which held the highest market
share and revenue in Britain's grocery industry, faced a significant financial crisis, with a steady
decline in net sales starting from the fiscal year 2012/13. The share price experienced a decline of
about 20% between January 2015 and January 2016, and a decrease of around 50% from January
2014 to May 2016.

The case study examines the tactics employed by Dave Lewis, the CEO of Tesco, to restore
profitability while simultaneously reinvesting in the customer experience. Despite facing financial
difficulties, the corporation was able to achieve a pre-tax profit of £162 million for the fiscal year
2015/16, which is a significant improvement from the loss of £6.38 billion in the previous fiscal
year 2014/15. The case study prompts inquiries on the strategic steps that Lewis should take to
enhance Tesco's value for shareholders, the specific areas he should prioritize to strengthen Tesco's
financial performance, and the measures he should implement to enhance Tesco's market share in
the United Kingdom.

The document offers an elaborate overview of Tesco, encompassing its expansion plan, historical
achievements, and the obstacles it encountered. Additionally, it examines the current patterns in the
retail sector and provides an analysis of Tesco's financial performance for the fiscal years 2014/15
and 2015/16. The case study provides a thorough analysis of Tesco's trajectory and the tactics it
utilized to overcome its financial difficulties. It offers valuable perspectives on the company's plan
for recovering from difficulties and the CEO's contribution to implementing this transformation.
Answer to Question 1

Tesco saw major challenges in its financial performance, including a persistent

decline in net sales and a substantial decrease in share price. Starting from the fiscal
year 2012/13, the company's net revenues have consistently declined. The decrease in
sales is a significant worry as it directly affects the company's capacity to make a
profit and its overall financial well-being.

Furthermore, alongside the decline in sales, Tesco's share price experienced a

significant decrease. Between January 2015 and January 2016, the share price had a
decline of about 20%. Furthermore, from January 2014 to May 2016, it suffered a
decrease of approximately 50%. The substantial decline in the company's stock price
indicates a decline in investor trust, which can hinder the company's ability to secure
funding in the future.

The document also references an accounting issue that occurred at Tesco shortly after
the appointment of the new CEO, Dave Lewis, in September 2014. The company's
projected profits for the first half of 2014 were reduced from £1.1 billion to £263
million because of accounting problems. This issue has a further impact on Tesco's
financial performance and reputation.

To summarize, Tesco encountered several key financial challenges, including a

continuous decline in net sales, a major drop in share price, and an accounting
controversy that resulted in a considerable reduction in projected earnings. The
company's financial health was significantly threatened by these concerns,
demanding strategic measures to resolve them.
Consistent Drop in Net Sales: Tesco had a sustained decline in net sales starting from FY 2012/13,
which had a negative influence on the company's profitability and overall financial well-being.

Significant Decrease in Share Price: The company saw a substantial decline in its share price. From
January 2015 to January 2016, the share price dropped by over 20%, and from January 2014 to May
2016, it decreased by over 50%. These declines indicate a decrease in investor confidence.

Accounting Scandal: Tesco experienced an accounting controversy in 2014, resulting in a significant

reduction in projected profits from £1.1 billion to £263 million. This had a further negative impact
on the company's financial performance and reputation.

Tesco is a renowned multinational retail corporation, operating in over 12 countries and serving millions of
customers worldwide.
: Known for its extensive product portfolio, Tesco offers a wide array of goods, including groceries, clothing,
electronics, and household items.
: Embracing technological advancements, Tesco has pioneered innovations in the retail sector, from online
shopping platforms to contactless payments.
: Tesco is dedicated to environmental responsibility, implementing sustainable practices and ambitious goals
to reduce its carbon footprint.
Actively involved in local communities, Tesco focuses on social initiatives, supporting charities, and
fostering community development.
Customer-Centric Approach: With a focus on customer satisfaction, Tesco consistently strives to enhance the
shopping experience through loyalty programs, promotions, and personalized services.
Top of Form

Global Retail Giant

Diverse Product Range
Innovative Retail Solutions
Commitment to Sustainability
Community Engagement:
Customer-Centric Approach: