After the impact of the new store openings, the retail giant Tesco registers a growth of 1% in the half-year up to 27th August and in the UK alone they rose by 0.6%.
Tesco Chief Executive Dave Lewis told that the company had made ‘remarkable progress’ in regulating the business. Despite a record loss last year and from an accounting scandal the retailer is just recovering. Any how the investors had welcomed the results and the shares shoot up to 9% in early trading. Mr. Lewis added that in spite of the uncertainty in the market, they had made significant progress and they were able to stabilise the business and in a balanced position to oversee the future. He told that they are winning back shoppers who may have gone elsewhere and they can see that almost 200,000 more customers made their way to Tesco than a year before.
Sales are up for the last three quarters in a row, despite the nadir last year and it has to face stiff competition from other retailers and are in a path of rebuilding trust after the accounting scandal. The group told that they were on a track to make £1.2bn in a complete-year of annual operation.
Mr. Lewis also set a new target for the group’s operating margins between 3.5% and 4% by 2019-20 fiscal years. In the first half of the financial year margins stood at 2.18%. Through an increase in investment in stores and network channel Tesco plans to achieve another £1.5bn of cost reductions.
Tesco registers a continuous price fall in the consumer goods by 6% less in September 2014. Mr. Lewis added that this is a good sign for the customers but the market is pretty tough for retailers.
Food prices shows a decline for the last two years. Mr. Lewis told that even though there is some pressures in the market in the form of higher commodity prices and a sharp decline in the currency, the retailer would try to shoulder it rather than pass on costs to customers. Anyway, the retailer has invested heavily in decreasing costs in the last two years and has slowly reduced its customers switching to Aldi and Lidl. In order to retain its profitability, the retailer had engaged in business not related to main stream but in the garden centre chain Dobbies, Giraffe restaurants and Harris and Hoole coffee shops.
The accounting scandal is still not completely turned down. Last September, three employees were fired in relation to it, however they deny it. An another issue of legal action is also in the books of the retailer in which a group of shareholders who claim to have lost around £150m accounting irregularities scandal.