UK retailer Tesco has posted an operating profit of £1.4 billion (€1.57 billion), up 25.4% year-on-year, in the first half of its financial year.
The company's EBITDA, excluding the impact of Tesco Bank, increased 15.3% to £2.3 billion (€2.58 billion) during the period.
Tesco also reported cost savings of £1.6 billion (€1.79 billion) to date, which is ahead of its fiscal target of £1.5 billion (€1.68 billion).
Divisional Performance
The retailer saw like-for-like sales increase 0.2% in the UK and Ireland against a backdrop of subdued market growth.
In Central Europe, sales declined 7.0% to £2.8 billion (€3.14 billion) from £3.0 billion (€3.36 billion) in the same period last year.
It was mainly affected by the company's decision to downsize its hypermarkets in Poland, Tesco said.
Store closures and reduced general merchandise sales also impacted its performance in the Czech Republic, Hungary, and Slovakia.
Like-for-like sales in Tesco's Asian operations declined 1.3% in the first six months as a result of reduced general merchandise sales.
However, the retailer's total sales in the region grew by 1.0%, at constant rates, to £2.6 billion during the period from £2.4 billion a year ago.
Outlook
The retailer sees itself well-positioned for sustainable and profitable growth in the future, having delivered its turnaround goals.
Chief executive, Dave Lewis, commented, "Despite challenging external conditions we have delivered a very good start to the year. I’m very pleased to say that we have now delivered every element of the turnaround plan and from this position of strength, the transformation of our business continues at pace.
"The Capital Markets Day in June laid out many opportunities for further, profitable growth and I’m delighted to share today the plans to step up our store opening programme, to increase our online capacity, the introduction of Clubcard Plus in the UK and the acquisition of Best Food Logistics as the next step in our Booker growth strategy," he added.
Announcing his decision to part ways with the company, Lewis said, "With the turnaround complete and as we begin to implement the next steps of our sustainable growth strategy, now is the right time to plan a smooth and orderly succession. As such, I will step down as Group CEO next summer and pass the baton to Ken Murphy."
Growth Strategy
Over the next three years, the retailer aims to open 750 Express stores in Thailand and 150 in the UK.
It also aims to open four new superstores in the UK and Ireland.
The retailer aims to double its online capacity in the UK by opening three urban fulfilment centres by the summer of 2020, and more than 25 centres over the next three years.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.
