Tesco shares fall despite rise in half-year sales

Tesco shares (LON:TSCO) fell on Wednesday morning, despite announcing a rise in sales for the half-year.

The UK’s largest supermarket said pre-tax profits for the six months to 25 August were up 2 percent at £564 million, compared to the same period a year previously.  Like-for-like sales were also up 2.3 percent.

Moreover, sales at Booker, the food wholesaler that Tesco recently acquired, rose 15.1 percent.

Chief Executive Dave Lewis said: “We have made a good start to the year. At the same time, we have made further strategic progress.

“We are firmly on track to deliver our medium-term ambitions and are continuing to improve the quality and value of our offer for customers in all our markets.”

However, the group’s overseas operations struggled across the period.

In Poland, changes to trading laws, which led to 13 less trading days, led to a 1.3 percent drop in same-store sales, resulting in a £32 million loss.

Tesco have thus far closed 18 stores in Poland, with plans to close further locations.

Profits also fell in Thailand across the period, with sales falling 5 percent in the second quarter.

Stores in Thailand had been affected by costs relating to rebranding in the region.

Nevertheless, Mr Lewis remained confident of the group’s future outlook. He added:

“The challenges in Poland and the turnround we are walking through in Thailand have no impact on the margin target. I’m happy and confident to confirm the 3.5 to 4 target. Everything is bang on track.”

The results follow the opening of Tesco’s first discount supermarket, Jack’s, which launched its first location in Chatteris, Cambridgeshire.

Jack’s has been pitched as a rival to Lidl and Aldi, selling own brand items at cheaper prices than its Tesco produce.

Moreover, Tesco’s banking arm recently was dealt with a blow, after the FCA fined the bank relating back to a cyber-attack back in 2016.

Tesco shares are currently trading -18.90 percent as of 10.54AM (GMT).