Tesco Plc (LON:TSCO) announced to today its preliminary results for 2016/17 in which it said that its strong performance drove sales growth and profit recovery continues.
Dave Lewis, Tesco Plc Chief Executive said: “Today, our prices are lower, our range is simpler and our service and availability have never been better. Our exclusive fresh food brands have strengthened our value proposition and our food quality perception is at its highest level for five years. At the same time, we have increased profits, generated more cash and significantly reduced debt.
We are ahead of where we expected to be at this stage, having made good progress on all six of the strategic drivers we shared in October. We are confident that we can build on this strong performance in the year ahead, making further progress towards our medium-term ambitions.
On top of this, our proposed merger with Booker will bring together two complementary businesses, driving additional value for shareholders by realising substantial synergies and enabling us to access the faster growing ‘out of home’ food market.”
Growth in sales, volume, profit and cash
· Group sales up 4.3% to £49.9bn.
· UK like-for-like sales up 0.9% – first reported full-year growth since 2009/10; UK food LFL up 1.3%.
· Positive volume growth in both UK & ROI and International.
· Group operating profit before exceptional items up 30% to £1,280m; UK & ROI up 60% to £803m.
· Step up in Group operating margin from 1.8% to 2.3%; on track for 3.5-4.0% ambition by 2019/20.
· Retail operating cash flow up 9% to £2.3bn.
· Net debt of £(3.7)bn, down 27%; £1.9bn of debt repaid within the year.
· Statutory revenue up 3.7% to £55.9bn; PBT down year-on-year after £(235)m exceptional charge booked post year-end following our agreement with SFO and FCA.
Six strategic drivers guiding our actions
· Brand health at strongest level in five years.
– Further improvement in core offer, including c.£300m investment in seven exclusive fresh food brands in March 2016, contributing to sustained market outperformance in fresh food.
– Price of typical basket down 6% since Sept 2014; promotional participation down to 32%.
– Most improved food retailer for quality perception; record rating for staff helpfulness at 80%.
– Availability at record high; simpler range with 24% net reduction over two years.
· Cost savings of £226m already achieved towards £1.5bn medium-term target; FY savings of £455m.
· Generated £2.3bn retail operating cash; £0.4bn underlying working capital inflow.
· More efficient mix across channels & products; improved service model in 1,500 stores.
· Released £0.5bn value from property; 1.0m sq. ft. space re-purposed; 16 stores re-purchased.
· Innovated to remove 14bn calories from soft drinks in two years; food donations up 148% as FareShare FoodCloud now in all large UK stores; PayQwiq digital wallet used once every 5 seconds.
