Preliminary results for half year 2016
The latest results for Tesco are only available to subscribers.
Preliminary results for financial year 2015/2016
Fourth Quarter• UK like-for-like sales growth of +0.9 per cent in 4Q• Group like-for-like sales growth of +1.6 per cent in 4Q• UK volumes up +3.3 per cent in 4Q• UK transactions up +2.8 per cent in 4Q• International volumes up +5.5 per cent in 4Q• £6.2bn reduction in total indebtedness, including contribution from sale of Homeplus in KoreaFinancial year 2015/16• LFL UK and ROI – down -0.7 per cent• LFL International – up +2.3 per cent
These figures show an improving environment for Tesco in the UK with solid trading in the fourth quarter. In the UK and the Republic of Ireland, there was a marked improvement in like-for-like sales performance from -1.3 per cent in the first half to -0.1 per cent in the second half. Full year UK sales declined by -0.4 per cent on a 52 week basis, reflecting an improvement in like-for-like sales performance and a declining contribution from net new store space, due to store closures. UK like-for-like sales, excluding VAT and excluding fuel, fell by -0.6 per cent in the year but improved over the course of the year, rising by 0.9 per cent in the fourth quarter driven by a strong performance across all store formats and product categories. Group operating profit before exceptional items was £944m, up 1.1 per cent on last year on a 52 week basis at constant exchange rates. Full year UK & ROI operating profit before exceptional items was £505m, with margin growth of 81 basis points between the first and the second half. There have been permanent reductions to the cost base, changing the relationship with suppliers and generating leverage through increasing sales volumes throughout operations.
Dave Lewis, Chief Executive, commented: "We have made significant progress against the priorities we set out in October 2014. We have regained competitiveness in the UK with significantly better service, a simpler range, record levels of availability and lower and more stable prices. Our balance sheet is stronger and we are making good progress in rebuilding trust in Tesco and our investment case."Our process of transformation has generated broad-based positive momentum in the UK and internationally. We set out to start rebuilding profitability whilst reinvesting in the customer offer, and we have done this. More customers are buying more things more often at Tesco."As a team, we are committed to serving shoppers a little better every day, in what remains a challenging, deflationary and uncertain market. We are confident that the investments we are making are leading to sustainable improvements for customers whilst creating long-term value for our shareholders."
19 weeks ended 9 January 2016
• Christmas (six weeks ended 9 January 2016)• Group like-for-like sales growth of +2.1 per cent• UK like-for-like sales growth of +1.3 per cento Customer satisfaction improved - all measures up between +3 per cent and +5 per cento Customer transactions up +3.4 per cent; volumes up +3.5 per cent• International like-for-like sales growth of +4.1 per cent• Third Quarter (13 weeks ended 28 November 2015)• Group like-for-like sales performance of +0.5 per cent• UK like-for-like sales performance of -1.5 per cento Reflects impact of lapping unsustainable couponing in prior year• International like-for-like sales growth of +2.9 per cent
These figures show a good trading performance for the UK and International, particularly over Christmas, with Group like-for-like sales up by 0.4 per cent for the 19 weeks to 9 January 2016 – the first reported increase for over four years. Total sales were in line with last year, as the sales reduction from store closures slightly exceeded the contribution from new store openings. At actual rates, sales declined by -2.2 per cent reflecting the impact on translation to sterling of currency weakness, particularly in Europe. In the UK, the third quarter like-for-like sales performance of -1.5 per cent reflected an impact of a little under -1 per cent from not repeating three '£5 off £40' national coupon campaigns from the prior year. For the six-week Christmas period, like-for-like sales in the UK grew by 1.3 per cent - a significant improvement on recent results. Volumes increased by 3.5 per cent and transactions increased by 3.4 per cent as more customers chose to do more of their Christmas shopping at Tesco. The strong Christmas performance was evident in all formats and categories, including positive like-for-like sales growth in our Extra format. In clothing, sales grew significantly ahead of the market, with strong ladies fashion and knitwear ranges supported by an attractive Christmas gifting offer.Home delivery achieved a record number of orders delivered in one day on 22 December and over 20,000 customers activated a Tesco Mobile pay-as-you-go mobile handset on Christmas day alone. Tesco Mobile is now the largest UK MVNO and has retained its position as the number one network for customer satisfaction with 4.5 million customers.
Dave Lewis, Chief Executive, commented: "Our Christmas performance was strong, benefiting from lower prices on an outstanding range of products. Our customer service improved materially and our colleagues went the extra mile. Put simply, we put customers at the heart of everything we did and they responded by buying more of what they needed at Tesco. “International sales have also continued to strengthen, driven once again by improvements across the offer. We continued our strong positive sales momentum in both Europe and Asia, with our Thai business reaching its highest ever market share.” We are continuing to focus our efforts on serving our customers a little better every day and I want to thank my colleagues across the Group for their commitment, passion and energy. There is plenty more to do, but we are making good progress and are trading in line with profit expectations for the full year."