Supermarket giant Tesco saw its operating profit fall by nearly 55% to £354m in its first half, it revealed this morning.
Delivering its unaudited figures for the 26 weeks ending 29 August 2015, the under-fire retailer also reported a UK like-for-like sales drop of 1.1% for the first half of its financial year.
It said, however, that sales trends were improving in response to cost-cutting measures with a like-for-like drop of 2% in Q4 last year improving to 1.5% in Q1 this year and 1.0% in Q2. Transactions were also up by 1.5%.
Tesco said it had undertaken cost-cutting and restructuring activities to improve its profitability and attractiveness to customers.
In the UK, 53 unprofitable stores have been closed and a reduced level of new store openings means there has only been a 0.5% growth in net new space. Progress has also been made in improving stock management and building longer-term relationships with suppliers.
These savings mean the company is on track to deliver annual savings of around £400m across the group, said the company.
Over 500 key product lines have had their prices reduced and the average number of products per range was reduced by 15%, with a 10% price drop on the remaining range.
Dave Lewis, Tesco’s chief executive, said: “We have delivered an unprecedented level of change in our business over the last 12 months and it is working. The first-half results show sustained improvement across a broad range of key indicators.”
Company net debt (excluding Tesco Bank) grew to £8.6bn, but the sale of the Homeplus business in South Korea is hoped to deliver a pro forma reduction of £4.2bn.