Tesco has released its first half financial results for 2016/2017 registering solid growth across all parts of the business.
After a year of streamlining – marked by the sale of Kipa, Harris + Hoole, Dobbies and Giraffe – and reassessing pricing strategy and product ranges, Tesco said it has made progress with regaining competitiveness in its core UK business and strengthening its balance sheet.
Chief Executive Dave Lewis explained that a renewed strategy of serving customers “a little better every day”, cutting prices and improving product ranges have been key to the retailer’s recent success.
We have made significant progress against the priorities we set out two years ago, stabilising the business and positioning us well for the future
–– Chief Executive Dave Lewis
He said: “Prices are more than 6% lower than two years ago, availability and service have never been better and our range is more compelling.”
In the UK, like-for-like sales grew 0.6% with transactions up 1.6% and volumes up 2.1%. International volumes were up 3.3% and transactions grew 0.3%. Net debt was reduced by a further £0.8bn since the year-end.
In H1 2016/2017, group sales totalled £24.4bn, compared with £23.7bn in H1 2015/2016, while group operating profit came in at £515m, up from £372m in the prior year’s first half.
Looking to the future, Lewis did acknowledge market uncertainty but remained positive. He added: “We have made significant progress against the priorities we set out two years ago, stabilising the business and positioning us well for the future.”
Tesco expects to deliver group operating margin of between 3.5% and 4% by its 2019/2020 financial year. It also aims to reduce operating costs by £1.5bn in the next three years.