Tesco to pay first dividend since 2014-15 crisis, profit up 27%
- Author: Eleanor Harrison Oct 05, 2017,
Oct 05, 2017, 0:23
The company reported the seventh consecutive quarter of sales growth in the United Kingdom and Republic of Ireland and the group operating margin rose to 2.7 per cent from 2.2 per cent past year.
"[This] reflects our confidence that we can build on our strong performance to date and in doing so, create long-term, sustainable value for all of our stakeholders", said Mr Lewis.
Operating profit before one-off items hit £759m for the six months to 26 August, which was up from £596m in the same period in 2016 and well ahead of the £700m forecast by analysts, according to Reuters.
Tesco said revenues grew by 3.7 percent to £28.3 billion over the reporting period, with customers attracted to Tesco stores and its online offerings by the "lowest level of food price inflation. amongst peers" operating in the UK.
Despite facing stiff competition from discount rivals like Lidl and Aldi, Tesco's fresh food performed well in the United Kingdom with sales up by 1.5 per cent.
The company's increased optimism comes as it inches closer to clinching its deal with wholesaler Booker, in a £3.7bn acquisition first unveiled in January this year.
"With increased competition in the sector, many had thought that margins would be compressed for a long time, but this rise suggests that all is not so bad for Tesco and the group is on track to meet the 3.5-4.0% target by 2019/20".
He said the secret of Lewis's success has been to work with fewer suppliers and then use the formidable buying power of the country's largest grocer to drive down prices.
Positive sales and profit growth come against a backdrop of "challenging" marketing conditions and "inflationary pressure", the retailer said. Further, Tesco resumed its dividend, for the first time since 2014/15 accounting scandal. Media reports suggest that the Competition and Markets Authority (CMA) is expected to give its provisional findings by next month and a final decision by December.
Laith Khalaf, senior analyst at Hargreaves Lansdown, says Tesco's return to the register "speaks volumes about the progress the company has made" and is symbolic.