Reintroduces dividend payments since 2014-15 accounting scandal
In a significant development since a massive accounting scandal crippled its reputation, Britain’s biggest retailer Tesco announced today that it would pay a dividend for the first time in three years. The group also reported a 27.3 per cent rise in profits for the first half of its financial year.
Tesco chief executive Dave Lewis hailed today’s report as “strong progress” as sales rose for the seventh quarter in a row: “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.”
The last time Tesco paid dividend was back in the 2014-15, just before three of its former executives were accused of overstating the profits by about £250m. This profit over-statement was identified three weeks after Lewis took over as the company and is primarily responsible for stabilising and growing the group again.
The firm has also reported a seventh straight quarter of underlying sales growth in its home market. Pre-tax profit was also up — £562m for the first half compared with £71m for the same period last year.
Despite facing stiff competition from discount rivals like Lidl and Aldi, Tesco’s fresh food performed well in the UK with sales up by 1.5 per cent.
UK’s inflation rate is currently at its highest in five years at 2.9 per cent. Despite such “challenging” conditions, the supermarket said it “worked hard” with their supplier partners to minimise price increases for the customers.
Today’s results come just when Tesco is awaiting the results of an inquiry into its proposed takeover of wholesale giant Booker. Media reports suggest that the Competition and Markets Authority (CMA) is expected to give its provisional findings by next month and a final decision by December.