Tesco interim operating profit more than halves

Tesco today said its first-half profits had more than halved but insisted its recovery was on track amid a slowdown in falling United Kingdom sales.

Where previously, suppliers may have sent its more “gnarly” negotiators to deal with Tesco, he urged them to now deploy “innovators” and “business builders” to help develop both businesses, “people who can talk about growth and cash and profitability and innovation in a completely holistic way”.

The supermarket price war took its toll on profits, with earnings tumbling to £166million in the first half, from £543million a year earlier.

Shares in the group traded 1.8 percent lower at 0735 GMT after a sharp rise ahead of the results.

“We have delivered an unprecedented level of change in our business over the last 12 months and it is working”, chief executive Dave Lewis said. The first-half results show sustained improvement across a broad range of key indicators.

After two decades of growth, Tesco lost its way, distracted by an expensive overseas expansion strategy when it needed to respond to the rise of discount grocers Aldi and Lidl in its home market.

The supermarket is reportedly in secret discussions with the SFO in an attempt to draw a line under the affair a year after Mr Lewis discovered the hole in its accounts.

Dave Lewis has made improving the customer experience a priority – cutting 53 unprofitable stores as part of his investment plan to win customers back from discounters.

Like-for-like sales were down 1.1 percent – the supermarket also says profits have been hit by restructuring costs.

Standardisation means that in the majority of categories, Tesco will allegedly be offering shorter payment terms to its suppliers than they in turn pass onto their own suppliers.

Lewis wants to cut costs, slash debt and rid the firm of its junk credit rating.

The company said it had concluded its portfolio review and the Dunnhumby data business would be retained. “Further progress will be driven by continuing to increase the level of cash generated from our retained assets”.