Tesco Says Turnaround Is On Track As Sales Rise Again
Like-for-like sales just short of City forecasts
by Abi Moses on 10th October, 2017
Tesco chief executive, Dave Lewis, has stated that the supermarket’s turnaround is “very firmly on track” whilst sales rose for the seventh quarter in a row.
Like-for-like sales, which exclude new store openings, heightened by 2.1% in the second quarter, just short of City forecasts.
Pre-tax profit was also higher for the supermarket, rising to £562m for the first half in comparison with £71m for the same period last year.
Tesco has unveiled that it would pay a dividend for the first time in three years, which has ultimately reflected “board confidence”.
The last time Tesco paid a dividend was in the 2014-15 financial year. This was before the supermarket group shocked the sector in stating that it had overstated profits by roughly £250m.
The chain is set to pay an interim dividend of 1p over share, though it’s expected to pay a larger final dividend of 2p per share.
"Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago," Mr Lewis said.
After the results, Tesco shares increased, though quickly fell again to trade 2% lower.
Hargreaves Lansdown analyst Laith Khalaf said the fall was due to the supermarket's sales growth slowing slightly from the first quarter, when like-for-like sales rose 2.2%.
"In any set of company results, there are always negatives the market can dwell on, and that applies in spades for a company like Tesco, which is in the process of recovering to full health," he added.
Overall, sales margins are now growing for the chain, and its market share has stabilised from the onslaught of discounters and, in an important show of confidence, Tesco has been paying a token dividend once again.
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