Tesco has posted a 28.4% operating profit increase worth €1.2 billion (£1.1 billion) across its UK and Ireland business in the first half of its financial year.
The retailer saw like-for-like sales increase 0.2% in the UK and Ireland against a backdrop of subdued market growth.
The groups overall operating profit was up 25.4% year-on-year which equates to €1.57 billion (£1.4 billion) according to its 2019 interim results which it published today.
In a statement ,the group attributed the increase to 'significant improvement driven by space right-sizing, cost savings and improved product mix.
Tesco also reported cost savings of €1.79 billion (£1.6 billion) to date, which is ahead of its fiscal target of €1.68 billion (£1.5 billion).
"Well-positioned"
The retailer sees itself well-positioned for sustainable and profitable growth in the future, having delivered its turnaround goals.
"Despite challenging external conditions we have delivered a very good start to the year," said Dave Lewis, chief executive, Tesco.
"I’m very pleased to say that we have now delivered every element of the turnaround plan and from this position of strength, the transformation of our business continues at pace.
Stepping Down
The retailer, announced this morning that Lewis will step down next summer and be succeeded by Ken Murphy, an executive at Walgreens Boots Alliance.
"With the turnaround complete and as we begin to implement the next steps of our sustainable growth strategy, now is the right time to plan a smooth and orderly succession," he added.
"As such, I will step down as Group CEO next summer and pass the baton to Ken Murphy."
John Allan, Tesco's chairman, commended Lewis on his "openness" which allowed him to "begin a thorough and orderly process to identify a potential candidate to replace him".
“It is with regret that I have accepted the resignation of Dave Lewis as Group CEO of Tesco, who has decided that he wants to leave the business in the summer of 2020 Dave has done an outstanding job in rebuilding Tesco since 2014 and he continues to have unwavering support from the Board," said Allan.
"Some time ago, however, he indicated to me that he was considering the best time to hand over to a successor."
Divisional Performance
In Central Europe, sales declined 7.0% to €3.14 billion (£2.8 billion) from €3.36 billion (£3.0 billion) in the same period last year.
It was mainly affected by the company's decision to downsize its hypermarkets in Poland, Tesco said.
Store closures and reduced general merchandise sales also impacted its performance in the Czech Republic, Hungary, and Slovakia.
Like-for-like sales in Tesco's Asian operations declined 1.3% in the first six months, as a result of reduced general merchandise sales.
Looking Ahead
As a result of lowering build costs, reducing operating costs and improvements in margin, the group said that it will proceed to open four new 'superstores' in Ireland and the UK.
It also announced it plans to open 750 Express stores in Thailand over the next three years.
The retailer also aims to double its online capacity in the UK by opening three urban fulfilment centres by the summer of 2020, and more than 25 centres over the next three years.
© 2019 Checkout – your source for the latest Irish retail news. Article by Donna Ahern. Click sign-up to subscribe to Checkout.
