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Tesco hails strong progress as sales rise again

Tesco hails strong progress as sales rise again

Tesco chief executive Dave Lewis has hailed "strong progress" at the supermarket as sales rose for the seventh quarter in a row. Like-for-like sales, which strip out new store openings, rose 2.1% in the second quarter.Pre-tax profit was also up, rising to ?562m for the first half compared with ?71m for the same period last year.Tesco said it would pay a dividend for the first time in three years, which it said reflected "board confidence".The last time Tesco paid a dividend was in the 2014-15 financial year, just before the supermarket group shocked the market in admitting it had overstated profits by about ?250m.
"Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago," Mr Lewis said.In the UK, Tesco said that fresh food in particular had performed well in the six months to 26 August, with sales up 1.5%, and was now in 70% of customers' baskets.
Farm brands
The supermarket said that despite "challenging" market conditions, it had "worked hard with our supplier partners to minimise price increases for customers". It said this was helping it to become "even more competitive".The UK's inflation rate is currently at its highest level in five years at 2.9%.Tesco's fresh food and farm brands labels have been credited with helping it to compete with discount rivals Lidl and Aldi. The supermarket has been battling to recover from its 2014 profit scandal, rising costs as well as continuing competition from the German discounters. Sanford Bernstein analyst Bruno Monteyne said the results showed that Tesco was recovering in the UK, while its troubled international operations were also improving. "Total scorecard: Dave Lewis is really delivering," he told the BBC's Today programme. Although the restored dividend is modest, he said it sent an important signal and was a "sign of confidence" from management about Tesco's prospects.
Booker deal
The results come as Tesco is awaiting the results of an in-depth competition inquiry into its proposed ?3.7bn takeover of wholesale giant Booker.The Competition and Markets Authority (CMA) is expected to report its provisional findings next month, with a final decision due in December. The CMA has said there are 350 areas where there is an overlap between Tesco shops and Booker-supplied independent stores.
Retailing
Tesco
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