Booker takeover helps Tesco increase sales and profits
Tesco is starting to see a pay-off from its takeover of wholesaler Booker with a rise in half-year sales and profits.
Britain’s biggest retailer saw its 11th consecutive quarter of growth in UK and Ireland like-for-like sales, with an increase of 4.2% over the past three months.
In the UK alone comparable sales were up 2.3% in the second quarter.
The chain said group-wide underlying operating profits increased by almost a quarter (24.4%) to £933m in the first half. Statutory group pre-tax profits rose 2% to £564m, or 2.2% higher on a constant currency basis.
In the UK and Ireland Tesco booked a 47.6% rise in operating profits to £685m – £97m of which was linked to Booker.
Dave Lewis, chief executive of Tesco, said the company had made a “good start” to the year.
“The step up in the second quarter is driven mainly by the UK and Republic of Ireland and delivers our 11th consecutive quarter of growth.
“At the same time, we have made further strategic progress. We completed our merger with Booker in March and are delighted with performance so far.”
Tesco finalised the £3.7bn deal earlier this year, and the group has been moving quickly to integrate the two businesses.
However, Tesco saw statutory operating profit fall 6.5% to £819m as it booked exceptional costs linked to the closure of its non-food online business Tesco Direct.
The group recently launched a new discount store format – Jack’s – as it aims to take on German discounters Aldi and Lidl, which have eaten into the market share of Britain’s so-called “big four” supermarkets.
It is one of a number of initiatives Mr Lewis has launched to retain market dominance.
He added: “We announced a strategic alliance with Carrefour in July which goes live this month.
“And we are now more than half-way through the biggest own brand re-launch in our nearly 100-year history, including a significant investment in over 300 new ‘Exclusively at Tesco’ products at market-leading prices.”