Tesco, Britain's biggest retailer, reported a weaker than expected 24.4% rise in first-half profit, held back by a poor performance in mainland Europe and Asia.
The retailer did deliver growing sales in its home market, boosted by its newly acquired wholesaler Booker and a solid summer, and said it was "firmly on track" for its medium-term ambitions.
Home Performance
UK like-for-like sales rose 2.5% in the second quarter, up from a 2.1% in the first, but sales fell by 2% in Europe and by 4.8% in Asia.
"The step up in the second quarter is driven mainly by the UK & Republic of Ireland and delivers our eleventh consecutive quarter of growth," chief executive Dave Lewis said.
Tesco, which spent nearly £4 billion buying Booker, said on Wednesday it made an operating profit before one-off items of £933 million for the six months to Aug. 25, up from £750 million in the same period last year.
Traders said that was below forecasts of £992 million.
Rebuilding
Lewis has been rebuilding Tesco since 2014, when an accounting scandal capped a dramatic downturn in trading.
He has lowered Tesco's prices versus all its major competitors, streamlined product ranges and improved their quality, while raising store standards and transforming relationships with suppliers.
The company said it had relaunched 5,038 of 10,000 own brand products and attracted more than 189,500 new customers.
Tesco is aiming to make cost savings of £1.5 billion, generate £9 billion of retail cash and earn between 3.5 and 4 pence of operating profit for every pound customers spend by the end of its 2019-20 financial year. It had a margin of 2.94% in the first half.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
