Tesco first half operating profit plunges by 55pc
Britain's biggest supermarket Tesco said its turnaround plan was starting to work, with more people shopping in its stores, but the heavy cost of rebuilding the business was evident in a collapse in a first-half profit.
Reporting results one week after rival Sainsbury's showed it too was starting to recover from the turmoil hitting the sector, Tesco posted results showing that like-for-like sales in the UK and Republic of Ireland were down 1pc in the second quarter.
This was an improvement from the 1.5pc fall in the first quarter and a 2pc fall in the fourth quarter of last year.
Transactions and volumes of products sold both rose, but the move to cut prices, improve customer service and increase product availability all came at a cost.
Heavy investment meant that operating profit before one-off items, its new headline performance measure, fell 55pc to £354m in the six months to August 29, its fiscal first half.
"We have delivered an unprecedented level of change in our business over the last twelve months and it is working," chief executive Dave Lewis said. "The first-half results show sustained improvement across a broad range of key indicators."
The group reiterated its outlook for the full year but said it remained ready to invest further in the business if needed. It also said it would retain its Dunnhumby data business.
After two decades of growth, Tesco lost its way - distracted by an expensive overseas expansion strategy when it needed to respond to the rise of discount grocers Aldi and Lidl in its home market.
It reported an annual loss of £6.4bn in April, one of the biggest in British corporate history.