Tesco celebrates growth with first dividend payment since 2014

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Tesco has reported a 3.3% increase in group sales, with sales in UK stores up 2.2% on a like-for-like basis at the interim stage.

Group operating profit rose 27.3% to £759m and the profit margin increased to 2.7% from 2.2% in 2016/17.

Commenting on the results, Derya Yildiz, senior analyst, Kantar Retail, said: “CEO Dave Lewis is confident about the business turnaround, and it is bearing fruit for investors – Tesco resumed dividend payment to stakeholders, marking the first payment since 2014.

“Tesco has been under pressure for more transparency in recent weeks so the retailer will do everything it takes to ensure shopper satisfaction. Shopper experience – both in-store and online to secure shopping trips – is at the core of these efforts.”

According to Yildiz, Tesco is making the right moves to secure a bigger share of shopper wallet. “While Sainsbury’s tests a checkout-free payment app and Costcutter trials fingerprint payment, Tesco’s new Tesco Pay+ is a much simpler yet effective move,” he said. Tesco replaced the PayQwiq app with Tesco Pay+, which combines payment and loyalty in one app for quick shopping. “Many grocers have apps, but few combine these two functions. Tesco can easily roll out the new app with a short testing phase, winning the basket here and now,” Yildiz said.

But Tesco’s race for speed is not limited to app, Yildiz added. The grocer extended the same-day grocery delivery service across the UK in Q2 and the service is free to Delivery Saver members, mimicking the Amazon Prime membership. “As we are counting down for Christmas, Tesco aims to secure the holiday spend ahead of the season with flash deals in key categories like toys. It’s all about taking a good position against the likes of Amazon and Argos, rather than the rest of the Big 4, to win the shopper,” Yildiz said.