Lewis focused on customers
Tesco back in profit and ‘generating positive momentum’
Chief executive Dave Lewis said the balance sheet was stronger and trust in the company was being rebuilt. Despite the improved performance shares in the company fell 7%.
UK like-for-like sales, excluding VAT and excluding fuel, fell by 0.6% but improved over the course of the year, rising by 0.9% in the fourth quarter, the first quarterly sales growth for three years.
Mr Lewis said: “We have made significant progress against the priorities we set out in October 2014. We have regained competitiveness in the UK with significantly better service, a simpler range, record levels of availability and lower and more stable prices.
“Our balance sheet is stronger and we are making good progress in rebuilding trust in Tesco and our investment case.
“Our process of transformation has generated broad-based positive momentum in the UK and internationally. We set out to start rebuilding profitability whilst reinvesting in the customer offer, and we have done this. More customers are buying more things more often at Tesco.”
John Ibbotson, director of the retail consultancy, Retail Vision said: “Dave Lewis is achieving an extraordinary feat – turning around an oil tanker in a very tight spot.
“With Tesco hemmed in on all sides by ruthless competition and food price deflation, it’s a delicate manoeuvre that requires both skill and vision. Yes the turnaround is painfully slow, but for the Tesco behemoth to have begun its pivot without hitting the rocks is a huge achievement.
“For a brand that last year posted the largest ever loss on the UK high street, the return to sales growth for the first time in more than three years feels like a transformation.
“Yet much more work – and pain – lie ahead. Better service and brutal price cuts have won back customers and boosted sales, but the cost has been to the bottom line. Tesco’s profits are now less than a quarter of the £4billion achieved just four years ago.”