Tesco sales up as profits top £1bn

Tesco has reported its first full-year increase in UK sales. Picture; PA
Tesco has reported its first full-year increase in UK sales. Picture; PA
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Tesco has reported its first full-year increase in UK sales for seven years as the supermarket’s recovery under boss Dave Lewis gathers pace.

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Tesco Group Chief Executive Dave Lewis. Picture; PA

Tesco Group Chief Executive Dave Lewis. Picture; PA

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Like-for-like sales rose 0.9% in the UK last year, Tesco’s first reported full-year growth since 2009/10.

The supermarket giant said operating profits rose 30% to £1.28 billion, while total sales increased 4.3% to £49.9 billion.

Mr Lewis said: “We are ahead of where we expected to be at this stage, having made good progress on all six of the strategic drivers we shared in October.

“We are confident that we can build on this strong performance in the year ahead, making further progress towards our medium-term ambitions.”

Like-for-like food sales in the UK were up 1.3%.

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However, on a statutory basis, pre-tax profits fell 39% to £145 million after the firm booked an exceptional £235 million charge linked to payments to UK authorities over its 2014 accounting scandal.

Mr Lewis reiterated that Tesco’s proposed £3.7 billion merger with Booker will add shareholder value.

He said: “Our proposed merger with Booker will bring together two complementary businesses, driving additional value for shareholders by realising substantial synergies and enabling us to access the faster growing ‘out of home’ food market.”

However, a number of investors have spoken out against the deal in recent weeks.

Both Schroders and Artisan, which own 9% of Tesco, have publicly said it should be called off, insisting that the price being paid is too high and that a merger will distract from the core business.

The tie-up is also expected to face scrutiny from the Competition and Markets Authority (CMA), which could force Tesco to offload stores if it deems the deal harms competition.

Booker is the country’s largest wholesaler and owns the Londis and Budgens convenience store brands.

READ MORE: Tesco agrees bumper tie-up with wholesaler Booker

The chief executive added that Tesco is working with suppliers to mitigate increasing inflation.

“Our principle is to minimise inflation, but we are not unrealistic, we know there are real pressures. The last place we want to go is to increase price for customers.”

British businesses have been stung by the Brexit-induced collapse in the pound, which has led to soaring costs, many of which have been passed on to consumers.

“In collaboration with our supplier partners, we have worked hard to minimise the impact of emerging inflationary cost pressures. Despite some inflation in a number of categories, the price of a typical customer basket remains around 6% cheaper than in September 2014,” Tesco added.