Tesco profits down by more than half
Tesco saw its operating profit before exceptional items drop by 55% to £354 million in the first half of its financial year as the supermarket works to turn its business around.
In the six months to 29 August, like-for-like sales in the UK and Republic of Ireland declined by 1.3%, with an improving trajectory in performance from a 2% fall in the fourth quarter last year.
The supermarket said that UK customers were responding well to improvements in its core offer and that it was seeing sustained year-on-year growth in transactions and volume.
Total international like-for-like sales increased in the half for the first time in nearly three years with like-for-like sales growth in all European markets.
Tesco chief executive Dave Lewis said: “We have delivered an unprecedented level of change in our business over the last twelve months and it is working. The first half results show sustained improvement across a broad range of key indicators.
“In the UK, we continue to improve all aspects of our offer for customers, resulting in volume growth which is allowing us to create a virtuous circle of investment.
“Our transformation programme in Europe has accelerated growth and reduced operating expenses, and in Asia, we have gained market share in challenging economic conditions.
“We have concluded our portfolio review with the sale of Homeplus, our business in Korea, enabling us to take a significant step forward on our priority of strengthening the balance sheet. Further progress will be driven by continuing to increase the level of cash generated from our retained assets.”
Looking ahead, Tesco said the market remains “challenging” and that its full year expectations are unchanged following initiatives already undertaken to improve its competitive position and reduce its cost base. It added: “Our focus remains on doing the right thing for customers and we are prepared to invest further if we see additional opportunity or need to enhance the long-term competitive position of the business.”
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