Tesco's £2.2bn profit beats expectations on turnaround
British retailer Tesco has posted better than expected full-year results, with the group now having met "or about to meet", the majority of its turnaround plans, according to CEO Dave Lewis.
He said there had been a "broad-based" improvement at the business, which Mr Lewis - a former Unilever executive - was parachuted into back in 2014 to revive the company.
Tesco had been hit by a major accounting scandal, profit warnings and declines in market share.
Releasing full-year results, Tesco said that its sales rose 11.3pc to £56.9bn (€66.1bn) in the 12 months to February on a constant currency basis, while its operating profit surged 33.5pc to £2.2bn (€2.5bn).
In Ireland, its retail revenue, including fuel and excluding Vat hit €2.68bn, compared to €2.57bn in the previous year.
The Irish arm saw its like-for-like sales excluding fuel slow significantly in the fourth quarter, when they declined 0.4pc, but they were still 1.3pc higher for the full financial year.
"In a competitive market, we have continued to make good progress during the year, growing volumes across all food categories," Tesco said of its Irish operation.
The chief executive of the Irish division, Kari Daniels, said customers are responding to store upgrades and product innovation with increased volumes, transactions and basket sizes.
According to figures this week from research group Kantar, Tesco has a 21.2pc share of the Irish grocery market - the same as SuperValu - and behind Dunnes, with 22.3pc.
Mr Lewis said Tesco has now "rebuilt a sustainable base of profitability", and that the full-year margin of 3.45pc represented "clear progress".
Tesco said that consumers in the UK have continued spending despite "Brexit fatigue".
The latest results reflect revamped relationships with suppliers, lower prices versus major competitors, simplified and better quality product ranges and improved store standards, according to Tesco.
The improvements have helped Tesco steer a steady course through a period of industry turmoil, as Britain prepares to leave the European Union and as Tesco's two biggest competitors try to merge to become the new industry number one.
Mr Lewis said almost every assumption made when he set recovery targets had been up-ended by events such as Brexit, which has caused the pound to fall and a deepening political crisis.
Mr Lewis said consumers were not changing their shopping habits or stockpiling as a result of Brexit.
"We've not seen any softening [in consumer confidence]," said Mr Lewis.
"We've not seen any discernible change in buying behaviour through the fourth quarter or indeed into the early part of this year," he added.
Russ Mould, investment director at AJ Bell, said Mr Lewis had "delivered the goods".
Additional reporting Reuters