Troubled supermarket Tesco (LON:TSCO) reported their first year of sales growth in seven years on Wednesday, with profits crossing the £1 billion mark.
Operating profit rose 30 percent to £1.28 billion in the year to the end of February, with its UK business seeing profits surge 60 percent to £803 million.
The results were helped by reduced prices, with the price of typical basket down 6 percent since Sept 2014 and promotional participation down to 32 percent. Customer service was also improved, with the group achieving a record rating for staff helpfulness at 80 percent, and availability of products hit a record high.
Dave Lewis, Chief Executive, attributed this to the strong results:
“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.”
Lewis also commented on the progress of the group’s turnaround plan, which has been in place since 2014 after a string of profit warnings under his predecessor, Philip Clarke. However the group has been continued to be hit by problems, including an accounting scandal for which it agreed a fine of £129 million to settle the case with the Serious Fraud Office.
“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. We are confident that we can build on this strong performance in the year ahead, making further progress towards our medium-term ambitions”, Lewis continued.
However, investors failed to be impressed by the news, sending Tesco shares down 3.32 percent to 189.00 (0932GMT).