Tesco shares soar as chief executive Lewis thinks chain's crisis 'is over'
Shares in Tesco soared over 13pc after it reported sales growth in the UK and every other division during the first six months of its financial year.
"We think the crisis is over," chief executive Dave Lewis told analysts in London yesterday.
He said the retailer is now more competitive in the UK, and that its metrics are improving across the board.
The interim group operating profit jumped 56.7pc to £596m (€676.3m) on a constant exchange rate basis, while revenue was up 1.3pc on the same basis at £24.4bn (€27.7bn). The results beat analyst expectations.
In Ireland, Tesco's like-for-like sales rose 0.2pc in the period, to €1.22bn, excluding VAT and including fuel.
Mr Lewis was parachuted into the group two years ago to reverse the retailer's ailing fortunes. He also had to contend with the fallout from a toxic accounting scandal.
Since his arrival, he has been aiming to stabilise the group's balance sheet, make it more competitive, and rebuild trust with customers and suppliers.
He said that the group has now posted volume growth in the UK for seven consecutive quarters.
That volume growth has increased its operational leverage, and helped the chain to lower its prices.
Tesco chief financial officer Alan Stewart said that in the UK and Ireland the group has now reported three consecutive quarters of like-for-like growth - the first time in six years that it has done so.
In Ireland, where the retailer is now the joint second-biggest grocery retailer alongside Dunnes Stores, Tesco generated like-for-like sales growth of 0.3pc in the first quarter, and 0.1pc in the second quarter.
"The Irish market is coming off a very low base in 2015 and 2016," said Mr Stewart. "It continues to show growth. Market competition has been a bit stronger in the recent periods but we continue to deliver good growth in that market."
The chief executive of Tesco Ireland, Andrew Yaxley, said the group is continuing to invest in reducing prices for consumers.
He said that the chain has also improved the quality of its fresh food produce, simplified its range, and extended its lines of Tesco own-label products.
Mr Lewis now aims to raise Tesco's margin, and pursue cost savings, particularly from its purchase of items not for resale - everything from toilet paper for staff to shopping trolleys.