Tesco on course to meet turnaround goals as pre-tax profits jump by 28.8%

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Tesco has posted a 28.8% surge in annual pre-tax profits to £1.7bn and is on course to meet its turnaround goals, according to CEO Dave Lewis.

Like-for-like sales in the UK & ROI were up 2.9% with Tesco in the UK recording a 1.7% increase and Booker 11.1% growth.

According to Tesco, all store formats and channels delivered like-for-like sales growth; with particularly strong performance in the convenience business, which includes the One Stop chain.

Tesco said the continuing success of ‘Exclusively at Tesco’ contributed to overall UK market sales and volume outperformance during the fourth quarter.

Lewis said: “After four years we have met or are about to meet the vast majority of our turnaround goals. I’m very confident that we will complete the journey in 2019/20.

“I’m delighted with the broad-based improvement across the business. We have restored our competitiveness for customers – including through the introduction of ‘Exclusively at Tesco’ – and rebuilt a sustainable base of profitability. The full year margin of 3.45% represents clear progress and the second half level of 3.79%, even before the benefit of Booker, puts us comfortably in the aspirational range we set four years ago.

“I’m pleased that we are able to accelerate the recovery in the dividend as a result of our continued capital discipline and strong improvement in cash profitability.”

Alastair Lockhart, insight director and retail analyst at Savvy, said: “Today’s Tesco’s results are impressive on multiple levels. Principally we see a strong financial performance, driven by the turnaround of the core UK grocery business.

“Innovation is back at the top of the agenda and shoppers are responding well. Exclusively at Tesco has reinforced the retailer’s own brand and has provided valuable differentiation is a competitive market.

“Finally, the Booker merger is confirmed as a move of strategic genius, delivering financially but also providing critical buying scale, at a time when it now looks unlikely that the Asda/Sainsbury’s merger will proceed.”