Tesco today hailed growth across its sales channels as it reported rising sales and profits in the first half of its year.
Online grocery sales rose by 3.5%, on a like-for-like basis, as customer numbers grew, while its large store business saw sales rise by 1.8%. Its non-grocery Tesco Direct business closed in July; today Tesco said that the business made a first-half operating loss of £23m and that it was writing off £57m in costs around its closure. Tesco online grocery shoppers can now buy a limited range of general merchandise items online when they buy food.
The retailer now aims to improve its mix across channels, products and geographies: it aims to focus on “sustainable general merchandise categories by closing Tesco Direct” and says it is on track to achieve its ambition of profit margins of 3.5 to 4% by 2019/20.
The update came as Tesco, an Elite retailer in IRUK Top500 research, reported group sales of £28.3bn in the six months to August 25 – 12.8% ahead of the same time last year, boosted by its merger with wholesale business Booker. Tesco like-for-like (LFL) group sales, which strip out the effect of that deal and of store openings and closures, were 3.8% ahead across the UK and Republic of Ireland, and 2.3% ahead in the UK alone. Booker LFL sales were up by 14.7%. LFL sales improved in the second quarter of the year, rising form 3.5% to 4.2%. Sales in its Central European business fell by 1.2% LFL as new Sunday trading regulations were introduced in Poland – the retailer plans to close a total of 31 stores in the market this year, of which 18 have already closed.
Pre-tax profits of £564m were 2% up on last time.
The retailer said that 189,500 more shoppers were now buying from Tesco and that brand perception was up by 3.6 points.
Chief executive Dave Lewis said the business and made further strategic progress in the half year. “We completed our merger with Booker in March and are delighted with performance so far,” he said. “We announced a strategic alliance with Carrefour in July which goes live this month. And we are now more than half-way through the biggest own brand re-launch in our nearly 100-year history, including a significant investment in over 300 new ’Exclusively at Tesco’ products at market-leading prices.
“We are firmly on track to deliver our medium-term ambitions and are continuing to improve the quality and value of our offer for customers in all of our markets. In doing so, we are well-positioned to deliver strong, sustainable returns for shareholders.”
The strategic alliance with Carrefour will see the retailers collaborate on their global supply chains over the course of three years.
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