Tesco chief executive Dave Lewis has said the supermarket’s turnaround is “very firmly on track” as sales rose for the seventh quarter in a row. Like-for-like sales, which exclude new store openings, rose 2.1% in the second quarter, just short of City forecasts. Pre-tax profit was also up, rising to £562m for the first half compared with £71m for the same period last year.
Tesco said it would pay a dividend for the first time in three years, which it said reflected “board confidence”. The last time Tesco paid a dividend was in the 2014-15 financial year, just before the supermarket group shocked the market in admitting it had overstated profits by about £250m.
The UK’s largest supermarket chain will pay an interim dividend of 1p per share, and said it expects to pay a larger final dividend of around 2p per share.
“Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago,” Mr Lewis said.
Tesco’s shares rose initially after the results, but quickly fell to trade almost 2% lower. Hargreaves Lansdown analyst Laith Khalaf said the fall was due to the supermarket’s sales growth slowing slightly from the first quarter, when like-for-like sales rose 2.2%.
“In any set of company results, there are always negatives the market can dwell on, and that applies in spades for a company like Tesco, which is in the process of recovering to full health,” he added.
