Supermarket giant Tesco reported a £162m pre-tax profit for the year to 27 February, its first quarterly sales growth since 2013.
UK like-for-like (LFL) sales at Tesco were up 0.9% in the fourth quarter, which the supermarket hailed as “significant progress”.
This follows last year’s £6.3bn loss, the worst results in the supermarket’s history. It said in the update that a program of cost-cutting through store closures and a bumper Christmas had forged the comeback.
Dave Lewis, chief executive, said the group had “regained competitiveness in the UK”.
Last September, Tesco sold its South Korean business, Homeplus, for £4.2bn to help revitalise its UK business.
Recent reports have suggested that the supermarket group is planning to sell off some of its other side businesses, including Euphorium Bakery, coffee shop chain Harris + Hoole, the Dobbies Garden Centres chain, and restaurant chain Giraffe, so that it can focus on the main supermarket business.
Lewis said of today’s update: “Our balance sheet is stronger and we are making good progress in rebuilding trust in Tesco and our investment case.”
Tesco’s shares fell 3% after the results this morning (13 April) to £190.2p.
But despite the progress, Lewis warned the market remained “challenging and uncertain”, and said its continued investment in prices to remain competitive would slow its profit improvement “particularly in the first half”.
Operating profit before exceptional items rose slightly to £944m for the year, higher than the £936m that analysts had forecast.
Total group sales were up 0.1% to £48.4bn.
Lewis is trying to revive Tesco with a focus on lower prices, streamlined product ranges, better customer service and new simplified relationships with suppliers, the root cause of the accounting issues that are still the subject of a criminal investigation by Britain’s Serious Fraud Office.