Tesco to post results

Retailer is likely to follow Morrison and Sainsbury’s by unveiling a large write-down on the value of its stores

Supermarket behemoth Tesco is due to report full-year results on Wednesday, and markets will be watching closely to see if a predicted £3 billion (€ 4.2 billion) impairment charge materialises. Analysts at Barclays believe Britain's biggest retailer is likely to follow the lead of Morrison and Sainsbury's by unveiling a large write-down on the value of its stores. Such a move would reflect falling sales and the closure of a number of outlets, among other factors. The Telegraph reported earlier this month that if the £3 billion hit comes to pass, the knock-on effect will be a significant pre-tax loss for the full year.

In a recent note, Barclays said that while sales trends, cost savings and profit forecasts were the focus three months ago, the retailer’s stretched balance sheet is likely to be of most interest on Wednesday, in particular its pensions and property impairments.

“These issues are widely understood – and impairments are clearly non-cash – but releasing a full set of financial statements may bring more mixed reactions than did January’s strategic overview,” Barclays said, predicting that Tesco’s pension deficit may have widened to more than £5 billion. It is expected the retailer will provide more detail as to how this will be addressed.