Tesco celebrates big leap in profits

Tesco has undergone a recovery plan under chief executive Dave Lewis after a 2014 accounting scandal and a dramatic downturn in its fortunes.

Mr Lewis said almost every assumption made when he set recovery targets had been overtaken by events such as Brexit, which has caused the pound to fall and a deepening political crisis.

He said that customers are suffering “Brexit fatigue”, but are not changing their shopping habits or stockpiling.

“We’ve not seen any softening (in consumer confidence),” he said.

“We’ve not seen any discernable change in buying behaviour through the fourth quarter or indeed into the early part of this year.

“After four years we have met or are about to meet the vast majority of our turnaround goals. I’m very confident that we will finish the job this year.”

Tesco reported a 29 per cent rise in annual pre-tax profits to £1.67bn, ahead of forecasts, while revenue grew 11 per cent to £63.9bn.

Like-for-like sales rose 2.9 per cent over the 52 weeks to February 23, which included a 1.7 per cent jump at Tesco and 11.1 per cent at wholesaler Booker.

Retail analyst Thomas Brereton at GlobalData said: “CEO Dave Lewis, living up to his nickname of Drastic Dave, has been mercilessly streamlining the business over the past four years, ditching divisions that obstruct the group from reaching the promised operating margin level of 3.5 per cent by this time next year.

“But the real question is – what next? With the turnaround targets all but achieved, Tesco now needs to set itself some new objectives. With the lack of clarity around Brexit, the short-term aim must be around fortifying supply chains to ensure no disruption in availability if a no-deal materialises.”