Tesco breathes a sigh of relief as the British supermarket group is well underway towards reaching its transformation goals. Turnover and profits both increased in the past financial year.
More profit than expected
In the past financial year, which ended on February 23rd, Tesco generated a turnover of 63.91 billion British pounds (74.31 billion euros). That's an increase of 11% compared to the year before. On a comparable basis, the supermarket group's turnover growth was 2.9%, 11.1% of which comes from wholesale branch Booker and 1.7% from the Tesco supermarkets.
Profit before taxes ended at 1.67 billion pounds (1.94 billion euros), an improvement compared to the 1.3 billion pounds of the previous year. Profits increased by 28% and (without non-recurring expenses) operational profits even ended 34% higher, at 2.21 billion pounds (2.57 billion euros), considerably more than what analysts had expected.
Objectives nearly reached
Tesco also claims to have reduced its expenses by 532 million pounds (619 million euros), which would mean the distribution group has already reached 1.4 billion of its projected 1.5 billion pounds of savings. "We're four years into the turnaround. We have met or we are about to meet our targets this year," says exhilirated CEO Dave Lewis, who is confident the company will reach its destination in 2019/2020. He considers the past financial year to be a strong one and sees wide improvement across the company. Four years ago, Lewis became CEO to save Tesco after an accounting scandal.
Tough decisions were the right ones
Jack's – a new subsidiary discount formula meant to compete with Aldi and Lidl – is doing well: today, there are eight stores and thanks to a strong response, the chain will continue to expand this year. In addition, Booker's bulk assortment is successful in Tesco's 70 lab stores and will continue to be rolled out.
Despite these good results, Lewis will continue unabated with his plan to scrap service counters in a number of the stores. That will jeopardise 9,000 jobs. "Some of the decisions taken to strengthen the business have been difficult but they’ve been the right ones to ensure that we stay focused on the customer while making the business more sustainable," the CEO told Reuters.