• Home
  • News
  • Business
  • Tesco H1 like-for-like sales grow 0.8 percent, declares dividend

Tesco H1 like-for-like sales grow 0.8 percent, declares dividend

By Prachi Singh

loading...

Scroll down to read more

Business

In the first half year of 2017/18, Tesco Group sales grew by 0.7 percent at constant exchange rates to 25.2 billion pounds (33.4 billion dollars) with like-for-like growth of 0.8 percent. At actual exchange rates, the company said, sales grew by 3.3 percent including a 2.6 percent foreign exchange translation benefit due to the ongoing weakness of Sterling. In the UK and the Republic of Ireland (ROI), like-for-like sales grew by 2.1 percent

Commenting on the company’s half-year trading, Dave Lewis, Tesco’s Chief Executive said in a press release: “We are continuing to make strong progress. Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago. Today’s announcement that we are resuming our dividend reflects our confidence that we can build on our strong performance to date and in doing so, create long-term, sustainable value for all of our stakeholders."

Highlights of Tesco’s half year results

In the UK, customer transactions grew 0.4 percent and overall volumes grew 0.3 percent. The company’s clothing segment reported a like-for-like sales rise of 3.5 percent. The company saw a much stronger mix of full-price sales, reflecting the quality of the range and strength of the F&F brand. The company’s Back to School event drove 13 percent sales increase year-on-year.

Tesco also posted like-for-like growth across all of its formats, with its large store business growing at 1.6 percent. In the Republic of Ireland, like-for-like sales grew by 1.1 percent, while Central Europe, like-for-like sales grew by 0.1 percent. Overall sales reduced by 0.9 percent at constant exchange rates, reflecting the impact of store closures. In Asia, overall sales fell by 6 percent at constant exchange rates, with like-for-like sales falling by 8.3 percent.

Group operating profit before exceptional items was 759 million pounds (1,007 million dollars), up 23.7 percent on last year at constant exchange rates and 27.3 percent at actual rates. UK & ROI operating profit before exceptional items was 471 million pounds (625 million dollars), up 21.1 percent, with margin growth of 32 basis points. Central Europe operating profit before exceptional items was 61 million pounds (81 million dollars), up 44 million pounds (58 million dollars) at actual exchange rates. Asia operating profit before exceptional items was £141 million pounds (187 million dollars), up 24.8 percent at constant exchange rates and up 39.6 percent at actual rates.

Diluted earnings per share were 5.46p, 71.2 percent higher year-on-year principally due to our stronger profit performance and lower cash finance costs. Statutory basic earnings per share from continuing operations were 5.22p, significantly higher than last year.

Tesco declares dividend, expands retail presence in Asia

Reflecting the improved performance in the business and the company has announced the restoration of the dividend. The interim dividend has been set at 1 pence per ordinary share and Tesco anticipates a broadly one-third, two-thirds split between the interim and final dividend and intends to reach its targeted cover of around two times earnings in the medium term.

Across the Group, the company’s repurposing programme has contributed to a net reduction of 0.4m sq. ft., improving the ease and relevance of our large-store shopping trip for customers. In Central Europe, this has primarily involved partnering with other clothing brands. In Asia, Tesco worked with a range of different partners across a variety of fashion, catering and entertainment brands. In the UK, it entered a new partnership with Dixons Carphone adding to the range of partners the company already works with, including the Arcadia Group, Holland & Barrett and Timpson.

In Asia, Tesco opened 33 stores, primarily in its convenience format in Thailand. In Central Europe, the company closed nine stores and closed 10 in the UK including nine One Stop stores.

The company announced that it is making good progress towards the medium-term ambitions shared in October 2016 and remains firmly on track to reduce costs by 1.5 billion pounds (1.9 billion dollars), generating 9 billion pounds (11 billion dollars) of retail cash from operations and improve operating margins to between 3.5 percent and 4 percent by 2019/20.

Picture:Tesco website

Tesco