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Tesco sales grow for seventh quarter running

Tesco sales grow for seventh quarter running

Alastair Lockhart, insight director at shopper marketing agency Savvy, said Tesco's reintroduction of a dividend is the latest in a series of milestones that confirms not only momentum, but pace in the retailer's recovery.

The company reported the seventh consecutive quarter of sales growth in the United Kingdom and Republic of Ireland and the group operating margin rose to 2.7 per cent from 2.2 per cent a year ago.

Chief Executive Dave Lewis said, "We are continuing to make strong progress".

"Today's announcement that we are resuming the dividend reflects our confidence that we can build on our strong performance to date and in doing so, create longterm sustainable value for all our stakeholders", said Mr Lewis.

Tesco's reinstated shareholder dividend payments as its group sales rise 3.3% and operating profits by 27% to £759m, its first half results reveal.

Pre-tax profit was also up - £562m for the first half compared with £71m for the same period past year.

Further, the company announced the restoration of the dividend, citing the improved performance in the business and the Board's confidence in its plans.

Despite facing stiff competition from discount rivals like Lidl and Aldi, Tesco's fresh food performed well in the United Kingdom with sales up by 1.5 per cent.

The company had net debt of 3.3 billion pounds by August 26.

The grocer said its inflation was around one per cent less than that across the rest of the supermarket sector as it worked with suppliers to protect customers from inflationary pressures.

Tesco has been back in the news for the wrong reasons in recent weeks as the trial of three former directors began in London on Friday on charges that the supermarket giant's "generals" had pressured staff members into massaging profits, leading to 2014's accounting scandal and then in 2015 one of the largest losses in United Kingdom corporate history. "While Sainsbury's tests a checkout-free payment app and Costcutter trials fingerprint payment, Tesco's new Tesco Pay+ is a much simpler yet effective move".

While the numbers and story behind Tesco at the moment looks encouraging, our view is that competition is here to stay and will be ramped up by the German discounters making the margin improvement targets more hard to achieve over time. Provisional findings are expected to be published by the end of this month, ahead of a final report by the end of the year.

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