Tesco (LON:TSCO) reported a sharp rise in profits for the year in spite of a challenging retail environment.
The UK’s largest supermarket reported pre-tax profits of £1.64 billion for the year to 24 February, up from £145 million for the previous year.
Sales at UK and Irish stores rose 2.4 per cent in the final quarter, ahead analyst expectations of the 2.2 per cent.
This marks a year of “strong progress”, as the retailer looked to turnaround its fortunes in light of the exposure of an accounting scandal in 2017.
Chief Executive Dave Lewis commented:
“This has been another year of strong progress, with the ninth consecutive quarter of growth,” he said.
“We have further improved profitability, with group operating margin reaching 3% in the second half.
“We are generating significant levels of cash and net debt is down by almost £6 billion 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.”
Despite the strong figures, competition among the UK’s supermarkets remains fierce, with the popularity of budget-friendly options Aldi and Lidl challenging the dominance of the Tesco and Sainsbury’s (LON:SBRY) brands.
Moreover, the retail sector continues to suffer, with many high-street retailers feeling the strain.
Consumers have been increasingly tightening their spending due to lower disposable incomes, as inflation continues to drive up the the price of groceries.
Following the collapse of Maplin and Toys R Us, Restaurant chains such as Prezzo and Jamie’s Italian also announced the closure of several locations, in a bid to streamline costs amidst challenging trading conditions.
In fact, last year the high street faced its toughest year since 2010, with a total of 1,700 chain chain shops closing.
On average, 11 chain stores a day opened, whilst 16 a day closed, according to an analysis conducted by the Local Data Company (LDC) for PricewaterhouseCoopers.
Shares in Tesco have ticked up 5.38 percent as of 11.13AM (GMT).
