Clothing boosts Tesco FY, turnaround remains "firmly" on track
UK supermarket retailer Tesco posted its ninth consecutive quarter of positive sales growth, with its clothing sector performing well throughout the year as its F&F range continued to prove popular with customers.
In its preliminary full-year results published today (11 April), Tesco said profit before tax soared to GBP1.3bn (US$1.84bn), compared with earnings of GBP145m a year earlier. Group operating profit before exceptional items, meanwhile, which gives a picture of the company's underlying performance, was up 28.4% to GBP1.64bn from GBP1.28bn in the year-ago period.
Group sales climbed 2.3% to GBP51bn, thanks to the retailer's ninth consecutive quarter of like-for-like sales growth. In the UK and the Republic of Ireland (ROI), like-for-like sales grew by 2.2% and 2.7% respectively.
The retailer said clothing "performed well" throughout the year with like-for-like sales growth of 2.6%, reflecting the strength of the F&F brand and quality of its range.
CEO Dave Lewis said it has been another year of strong progress.
"More people are choosing to shop at Tesco and our brand is stronger, as customers recognise improvements in both quality and value," he added.
"We have further improved profitability, with group operating margin reaching 3.0% in the second half. We are generating significant levels of cash and net debt is down by almost GBP6bn over the last three years. All of this puts us firmly on track to deliver our medium-term ambitions and create long-term value for every stakeholder in Tesco."
The retailer shared its ambitions in October of last year, which includes plans to reduce its costs by GBP1.5bn, generate GBP9bn of retail cash from operations and improve operating margins to between 3.5% and 4% by 2019/20.
Lewis also hailed the completion of the retailer's merger with Booker in line with deal timeline guidance.
Richard Lim, chief executive at Retail Economics, notes: "With the Booker tie-up now complete, the grocer is well-placed to deliver cost-saving synergies with the newly formed business and take the discounters head-on."
Thomas Brereton, retail analyst at GlobalData, adds while this pre-tax profit leap may be a singular event, all other KPIs suggest that Tesco is on-track to keep the top position in the convenience market.