Tesco CEO Dave Lewis says the supermarket is ahead of where it expected to be at this stage with a strong recovery plan that is increasing profits, paying off debt, lowering prices and preparing the ground for the proposed Booker merger.
Despite having to pay out £1.29 million as part of a deferred prosecution agreement (DPA) with the Serious Fraud Squad in relation to the accounting scandal dating back to 2014, Lewis says Tesco is going strong.
Tesco has reported a 30% increase in group operating profit to £1.28 billion in the year to the end of February, while the UK business jumped 60% to £803 million.
This is the first reported full-year growth since 2009/10.
“Today, our prices are lower, our range is simpler and our service and availability have never been better. Our exclusive fresh food brands have strengthened our value proposition and our food quality perception is at its highest level for five years. At the same time, we have increased profits, generated more cash and significantly reduced debt,” says Lewis.
The company has taken steps to cut managerial staffing levels, shut down distribution centres and reduce opening hours at some stores around the country.
In January Tesco announced that it would buy cash and carry wholesaler and foodservice business Booker which has 5,400 franchise shops under the Budgens, Londis and Premier brands.
“We are ahead of where we expected to be at this stage, having made good progress on all six of the strategic drivers we shared in October,” adds Lewis.
“We are confident that we can build on this strong performance in the year ahead, making further progress towards our medium-term ambitions.
“On top of this, our proposed merger with Booker will bring together two complementary businesses, driving additional value for shareholders by realising substantial synergies and enabling us to access the faster growing ‘out of home’ food market.”