LONDON: Tesco Plc, the U.K.’s largest retailer, maintained its profitability target for the current financial year as it uses its buying power to hold down prices.
Profit for the latest 12 months was ahead of expectations and the company said it’s on track to reach its goal of an operating margin of 3.5 percent to 4 percent in the current year. The results offer another sign that Tesco is emerging from years under the shadow of a massive accounting scandal.
“After four years we have met or are about to meet the vast majority of our turnaround goals,” Chief Executive Officer Dave Lewis said in a statement.
In what it described as an “uncertain market,” where other retailers are suffering from Brexit-related jitters and the rise of online shopping, the supermarket operator is using its scale to keep a lid on costs. Tesco announced in January that it would close some of its fresh-food counters, affecting as many as 9,000 employees in the U.K.
As rival J Sainsbury Plc awaits the outcome of a regulatory review of its planned purchase of Walmart Inc.’s Asda, Tesco is already reaping benefits from its purchase of wholesaler Booker last year. The new unit boosted operating profit by 196 million pounds ($256 million) for the latest 12 months.
Overall comparable sales for the fourth quarter rose 1.7 percent in the U.K., just below analysts’ estimate of 1.8 percent. Although Tesco’s U.K. business performed well, it’s struggling in central Europe and Asia, where comparable sales declined for the year. - Bloomberg
