Tesco returns to LFL growth

First half profit before tax took a tumble at Tesco, though the group returned to like-for-like (LFL) sales growth in the UK in the second quarter.

Statutory profit before tax fell 11.6% from a year earlier to £1.7bn in the 29 weeks ended August 25th, while adjusted profit before tax was down 8.5% at £1.8bn. Broker Panmure Gordon had forecast adjusted profit before tax of £1.6bn.

Group sales were up 1.4%, or 3.2% at constant exchange rates, to £36.0bn, and with petrol sales stripped out were up 1.6%, or up 3.7% at constant exchange rates.

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The UK like-for-like sales performance, while affected by the tough conditions in the market, improved through the first half, delivering positive growth of 0.1% in the second quarter before petrol and VAT. Broker Jefferies Hoare Govett had forecast a 0.2% decline in LFL sales while Nomura had forecast flat LFL sales.

"The improved like-for-like sales performance benefits from a more competitive offer as some of the changes we are making to the customer shopping trip start to come through, including in part the stronger blend of price, promotions, coupons and Clubcard offers we described earlier in the year," said Philip Clarke, Chief Executive of Tesco.

The interim dividend has been maintained at 4.63p.

More to follow ...

JH