Business rates and the national living wage risk crushing Tesco, the supermarket’s chief executive has warned, as the extra costs amount to a “potentially lethal cocktail”, reports The Telegraph.
Dave Lewis wants the government to meet with retailers to come up with a way to cut business rates and tweak the minimum wage plans, to ease the burden on the retail sector.
Tesco is already in financial difficulty, making a £6.4bn loss last year and hiring Mr Lewis in mid-2014 to turn the business around.
Profitability is down from 5 per cent in 2010 to 2 per cent now, he said, as the falling price of food and more competition have eaten into margins.
The switch to online shopping has made Tesco’s vast expansion plans of the last decade into a costly burden, while the financial crisis-era change to more, smaller shopping trips rather than one big weekly shop have also hurt Tesco.
Mr Lewis has slashed costs, closed 43 unprofitable stores and even shut the company’s headquarters in Cheshunt.
But despite his own efforts to turn the business around, Mr Lewis said “disproportionate” taxes and regulations could wipe out his work and make life even harder for Tesco.
“Over the last five years property values have fallen and profits are down, but business rates have risen quietly but dramatically,” Mr Lewis told the CBI’s annual conference.
“Shops have closed, jobs have been lost and businesses sacrificed… it is the biggest tax that we pay and now stands at three-times the OECD average.”
