Tesco reports profits surge and 2.2% like-for-like growth in UK sales

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Tesco has posted pre-tax profits of £1.3bn for the year to 24 February, up from £145m for the previous year, as UK like-for-like sales rose 2.2%.

Danielle Pinnington, managing director at shopper research agency Shoppercentric, said Tesco’s approach, under boss Dave Lewis, seems to be paying off. “A strong Christmas showed how far things had turned around, and the more confident approach to advertising and communication continues to demonstrate a return to what they are best at,” she said.

“That said they’ve had a couple of recent slips that have kept social media busy: the proposed changes to Clubcard was not well received by loyal shoppers, nor was the meal deal ‘shrinkflation’ which hit stores in this last week. So they need to be mindful that shoppers have so many easily accessible alternatives to Tesco. The business needs to cast a shopper perspective over all their plans, to make sure they don’t lose touch and alienate the very people making such a difference to their bottom line.”

Alastair Lockhart, insight director at shopper and retail marketing agency Savvy, agreed Tesco’s results today are a continuation of the retailer’s recent progress. “Sales are growing, profitability is improving and crucially Tesco has its confidence back and behaving like a market leade,” he said. “From the shoppers’ perspective stores are looking better, innovative products are hitting the shelves and the retailer’s price position is sharper.”

Lockhard said he was now looking for further clarity on Tesco’s plans for Booker, as this is set to form the foundation for Tesco’s development over the next few years. “It will be interesting to see how Tesco’s technology and processes can benefit Booker customers and symbol operators. And, perhaps more importantly, the merger gives Tesco access to the food services market, and therefore a new platform for growth.”