“We have made significant progress,” says Tesco CEO Dave Lewis
Tesco’s made a strong comeback after last year’s £6.3bn loss, its worst results in its history.
The giant has reported a £162m statutory pre-tax profit for the year to 27 February.
Tesco’s UK like-for-like sales were up 0.9% in the fourth quarter, this marked its first quarterly sales growth for three years.
While total group sales rose by 0.1% to £48.4bn, operating profit rose slightly to £944m for the year.
Tesco CEO Dave Lewis said: “We have made significant progress against the priorities we set out in October 2014.
“We have regained competitiveness in the UK with significantly better service, a simpler range, record levels of availability and lower and more stable prices.”
Here’s what John Ibbotson, director of the retail consultancy, Retail Vision, has to say:
“Dave Lewis is achieving an extraordinary feat – turning around an oil tanker in a very tight spot.
“With Tesco hemmed in on all sides by ruthless competition and food price deflation, it’s a delicate manoeuvre that requires both skill and vision.
“Yes the turnaround is painfully slow, but for the Tesco behemoth to have begun its pivot without hitting the rocks is a huge achievement.
“For a brand that last year posted the largest ever loss on the UK high street, the return to sales growth for the first time in more than three years feels like a transformation.
“Yet much more work – and pain – lie ahead. Better service and brutal price cuts have won back customers and boosted sales, but the cost has been to the bottom line. Tesco’s profits are now less than a quarter of the £4bn achieved just four years ago.
“But with all the major grocers dropping prices and a backdrop of food price deflation, a quick turnaround was never going to be possible.
“The challenge for Tesco now is to keep up the momentum and stay in the game while keeping market share. Tesco’s vast size is an advantage – as it allows the fallen giant to keep down prices for longer than its rivals.
“In the current war of attrition, this could prove a decisive factor.
“Dave Lewis has made some tough decisions, stopped the rot and halved the decline in Tesco’s market share. Its rate of growth is still paltry compared to that of Sainsbury’s and the discounters, and the future promises low profits and slow sales growth. But given the huge challenges Tesco faces, this performance looks little short of visionary.”