Tesco beats guidance with 28% full-year profit increase

UK supermarket group recorded yearly profit of £1.644bn

Tesco said it was firmly on track to deliver its medium-term targets which include cutting costs further and improving operating margins. Photograph: Luke McGregor/Reuters

Tesco said it was firmly on track to deliver its medium-term targets which include cutting costs further and improving operating margins. Photograph: Luke McGregor/Reuters

 

Tesco beat guidance with a 28.4 per cent rise in full-year profit on Wednesday, underlining the recovery of Britain’s biggest retailer under chief executive Dave Lewis.

The supermarket group, which last month completed the £4 billion ($5.7 billion) purchase of wholesaler Booker, made an operating profit before exceptional items of £1.644 billion (€1.88 billion) in the year to February 24th, 2018.

That compared to Tesco’s guidance of “at least” £1.575 billion and £1.28 billion made in 2016-17.

It said it was firmly on track to deliver its medium-term targets which include cutting costs further and improving operating margins to between 3.5 per cent and 4 per cent by 2019/20. It had a margin of 2.9 per cent in 2017/18.

“We are generating significant levels of cash and net debt is down by almost £6 billion over the last three years,” Mr Lewis said. “All of this puts us firmly on track to deliver our medium-term ambitions and create long-term value for every stakeholder in Tesco.”

Mr Lewis joined Tesco in September 2014, tasked with turning around the group which had been hit by a fall in sales and profits due to changing shopping habits, the rise of German discounters Aldi and Lidl and a 2014 accounting scandal.

Lewis first stabilised Tesco, then got it growing again with a focus on more competitive prices, new and streamlined product ranges, better customer service and much improved supplier relationships.

It said on Wednesday that like-for-like sales in its home market were up 2.2 per cent as it maintained a consistent performance throughout the year, helping it to be the strongest performer of the “big four” supermarkets alongside Morrisons. – Reuters