The retailer posted an underlying operating profit of £354 million in the 26 weeks to August 29, 55.1 per cent less than the group’s £779 million total reported in the same period previous year.
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A few may see the sales figures as a victory for Lewis and Tesco because analysts had anticipated a steeper drop of 1.5% in same store sales, excluding petrol.
Tesco remained tight-lipped on reports that it is in talks with the Serious Fraud Office (SFO) to settle a criminal probe into its accounting scandal, which plunged the group into crisis a year ago. Global sales meanwhile actually rose by one per cent.
Lewis said there had been seven waves of price reductions so far this year, and customers were responding.
Tesco said that “good progress” had been made in the first half against the three key priorities – regaining competitiveness in core United Kingdom business, protecting and strengthening the balance sheet, and rebuilding trust and transparency.
Tesco has had to slash prices to try and entice customers back from German discount chains Aldi and Lidl after it recorded the worst results in its history in February.
It was also started in this section that, under the extended Tesco Sustainable Dairy Group milk pricing model to British cheese suppliers, it was guaranteeing dairy farmers would continue to be paid at a level above the cost of production.
Phil Dorrell, of consultants Retail Remedy, said the results showed Tesco was “ready to move from intensive care into the recovery ward”.
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But Lewis warned of “seriously unintended consequences” if the wage debate only looks at headline hourly rate not other benefits. Tesco’s capital expenditure for the full year is on track to be less than 1 billion pounds and it will not pay an interim dividend, the company said.
