Tesco has unveiled a 28% rise in operating profits, boosted by better than expected sales growth in the last three months of its financial year.
The UK’s biggest retailer said it made a profit of £1.64bn in the year to 24 February as total group sales rose 2.8% to £57.5bn. Sales at established UK and Irish stores rose 2.4% in the final quarter, slightly ahead of the 2.2% analysts had expected.
Dave Lewis, chief executive, said: “This has been another year of strong progress, with the ninth consecutive quarter of growth. More people are choosing to shop at Tesco and our brand is stronger, as customers recognise improvements in both quality and value.
“We have further improved profitability, with group operating margin reaching 3.0% in the second half. We are generating significant levels of cash and net debt is down by almost £6bn 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.”
The update is the first since the completion of Tesco’s £3.7bn takeover of grocery wholesaler Booker last month. Booker’s former chief executive Charles Wilson has taken over as head of Tesco’s UK business from Matt Davies.
According to the latest market share data from Kantar Worldpanel, the UK’s biggest supermarket chain held a 27.6% share of the market in the first 12 weeks of the year, unchanged from the same period in 2017.
Tesco managed to hold off competition from fast growing German discounters Aldi and Lidl, which continued to increase their share of the UK grocery market at the expense of some of the bigger, more established names.