Tesco defies retail gloom with £1.3bn profits

That is an increase of 770% in the year to 24 February back into annual net profit – up from £145m the year – thanks to strong sales and restructuring, and two straight years of rising sales and the completion of its £3.7bn Booker deal.

Stripping out one-off items, Britain’s biggest retailer’s underlying profits increased by 28% to £1.64bn, while revenues lifted 1.3% to £57.5bn.

Like-for-like sales were up 2.2% across the year, with a strong performance from food but a decline for general merchandise as Tesco slimmed down the number of ranges it sells.

Tesco said market conditions “remained challenging” with continued cost price inflation, but reiterated it was working with suppliers to try to hold back price increases.

Chief executive Dave Lewis said: “This has been another year of strong progress, with the ninth consecutive quarter of growth.

“We have further improved profitability, with group operating margin reaching 3% in the second half.

“We are generating significant levels of cash and net debt is down by almost £6 billion over the last three years.

“All of this puts us firmly on track to deliver our medium-term ambitions and create long-term value for every stakeholder in Tesco.

“I am delighted to have completed our merger with Booker, and we are moving quickly to deliver synergies and access new growth, making the most of the complementary skills in our combined business.”

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