Tesco to accelerate UK turnaround plan

LONDON, United Kingdom - Britain's Tesco, the world's No. 3 retailer, is to accelerate a turnaround plan for its key home market, stepping-up the pace of large store revamps and investment in online and convenience channels as well as price cuts.

In a statement published ahead of an investor and analyst seminar later on Tuesday, the group also said it plans a further significant reduction in net new space growth that will see overall capital expenditure reduced.

Tesco is 22 months into a turnaround programme for its UK business that has already seen over 1 billion pounds invested in store revamps, more staff, new product ranges and pricing initiatives.

Despite that, sales at British stores open over a year, excluding fuel and VAT sales tax, fell 2.4 percent in the six weeks to January 4 and, according to monthly industry data, have continued to fall since.

Group capital expenditure will be reduced to no more than 2.5 billion pounds per year for at least the next three financial years, Tesco said on Tuesday.

In the 2012-13 year group capital expenditure was 3 billion pounds, or 4.1 percent of sales, a reduction of 0.7 billion pounds on the previous year.

In the UK in 2012-13 Tesco opened 1.4 million square feet of net new space, down 40 percent on the year before and said it planned to open a similar amount of net new space in 2013-14, including a large proportion focused on convenience.

"Tesco will reiterate its strategic priorities of continuing to invest in its strong UK business, establishing multichannel leadership and pursuing disciplined international growth," it said.

It added that the seminar will primarily focus on the long-term strategy for the UK business, including how the capabilities the retailer has built up over many decades position it well for the future.