Shares in British supermarket Tesco (LON:TSCO) climbed over 13 percent on Wednesday, following a strong set first half results.
The figures are the third consecutive quarter of growth for Tesco, the latest sign that chief executive David Lewis’ turnaround plan may be having an effect. Lewis, the former chairman of Unilever, has introduced a series of initiatives since his appointment to help revitalise the supermarket and increase its competitiveness in a tough market. Lower prices and improved customer service have contributed to a markedly stronger performance of late.
Sales rose 3.3 percent to £24.4 billion in the first half of the year, despite a 28 percent fall in pre-tax profit to £71 million. This has been attributed to £81 million of atypical costs, including redundancy payments and redress payouts at Tesco Bank.
In a statement, Lewis said: “The entire Tesco team is focused on serving shoppers a little better every day. Prices are more than 6pc lower than two years ago, availability and service have never been better and our range is more compelling.”
Tesco reiterated its full-year profit guidance of £1.2 billion as well as setting out further targets, the increase of operating margins from 2.18 percent to between 3.5pc to 4pc by the end financial year of 2019/20.
This is an encouraging development for Tesco, which continues to show marked recovery from an accounting scandal 2011 and public backlash following the mislabelled sale of horse meat in 2013. The supermarket sector has been troubled in recent years, with budget supermarkets Lidl and Aldi continuing to take market share from the ‘Big Four’ British supermarkets.
