Belfast Telegraph

Tesco turnaround continues as profits climb by almost 30%


Tesco has reported bumper full-year figures (Rui Vieira/PA)
Tesco has reported bumper full-year figures (Rui Vieira/PA)

By Ravender Sembhy

Tesco has announced a bumper full-year profits haul as it continues an impressive turnaround under boss Dave Lewis.

Northern Ireland's biggest supermarket multiple reported a 28.8% rise in annual pre-tax profits to £1.67bn - ahead of forecasts - while revenue grew 11.2% to £63.9bn.

Like-for-like sales increased by 2.9% over the 52 weeks to February 23, which included a 1.7% jump at Tesco and 11.1% at wholesaler Booker.

Comparable sales were up 1.9% in the fourth quarter in the UK and Ireland.

The business has around 50 branches of varying sizes across Northern Ireland, though its Tesco Metro in Belfast city centre has been closed since last August's fire at the neighbouring Primark Bank Buildings store.

The supermarket chain has a market share of 35.2% in Northern Ireland, according to figures from Kantar, making it the province's biggest grocer.

Mr Lewis said: "After four years, we have met or are about to meet the vast majority of our turnaround goals.

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"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, including through the introduction of 'Exclusively at Tesco', and rebuilt a sustainable base of profitability."

The group issued a final dividend of 4.1p, giving a full-year return of 5.77p per share. This compares to 3p last year.

Tesco said its annual profit margin of 3.45% represents "clear progress" and puts it "comfortably in the aspirational range" that Mr Lewis set four years ago.

The results come at a difficult time for the retail sector as consumer confidence takes a knock from Brexit worries.

Mr Lewis said that there was "fatigue" among shoppers over the never-ending drama at Westminster, but he added: "I'm not seeing any change in buying behaviour."

In addition, supermarkets are battling rising costs and fierce competition as Lidl and Aldi continue their relentless march.

Sainsbury's and Asda have agreed to merge but are awaiting the competition watchdog's approval.

According to the latest market report from Kantar, Tesco enjoyed Northern Ireland sales growth of 1.2% over the 52 weeks to March 24.

Sainsbury's market share was 17.3%, just ahead of Asda, which has 17 stores here, at 17%.

Sales at Sainsbury's, which has 14 stores across Northern Ireland, were up 0.9% on the year before.

As part of efforts to position Tesco to meet the challenges of a rapidly changing market, Mr Lewis paid £3.7bn to acquire cash-and-carry business Booker and launched Jack's, a discount chain that will supposedly rival the German discounters. However, January also saw Tesco announce that up to 9,000 jobs were at risk across its head office and stores as part of a major cost-cutting drive.

Shares were up 1.5% in morning trade at 237.3p.

Julie Palmer, partner at Begbies Traynor, said: "Dave Lewis has rebuilt the brand since its accounting scandal in 2014, helping to reduce costs by improving efficiencies in distribution and procurement while investing in new areas.

"External threats are also putting pressure on the retailer, with continued uncertainty due to Brexit and the turbulent high-street conditions.

"With Marks & Spencer's tie-up with Ocado and Amazon's new grocery arm, Amazon Fresh, Dave Lewis will be wary of standing still."

Tesco's profits for the 52 weeks to February 23 - a rise of 28.8%

Belfast Telegraph