Tesco boss 'very confident' after pre-tax profits up 28.8%

Tesco's chief executive has said he is "very confident" after the retailer announced pre-tax profits had risen 28.8% for the year.

Revenue at the supermarket chain rose 11.2% to £63.9bn as UK like-for-like sales were up 1.7% in the year 2018/19.

Chief executive Dave Lewis said: "After four years we have met or are about to meet the vast majority of our turnaround goals.

"I'm very confident that we will complete the journey in 2019/20.

"I'm delighted with the broad-based improvement across the business.

"We have restored our competitiveness for customers - including through the introduction of 'Exclusively at Tesco' - and rebuilt a sustainable base of profitability.

"I'm pleased that we are able to accelerate the recovery in the dividend as a result of our continued capital discipline and strong improvement in cash profitability."

In January, Tesco announced that 9,000 jobs would be affected in a restructuring of its store and head office functions.

The UK's largest retailer said it hoped to redeploy half the staff facing the prospect of losing their job in the planned shake-up, which is aimed at "simplifying" the business as chains continue to invest in price cuts by saving money elsewhere.

That news came just over a year after Tesco said it was cutting up to 1,700 management roles in the UK in order to "simplify" the business.

The UK's retailers are grappling with Brexit uncertainty and a lack of consumer confidence while supermarkets are also facing increasing competition amongst themselves.

Sainsbury's and Asda have agreed to merge but are awaiting regulator approval, while discounters Lidl and Aldi continue to gain ground.

Tesco has responded by spending £3.7bn on cash and carry business Booker and launching discount chain Jack's.

Mark Jones, partner and food and drink supply chain expert at Gordons law firm, said: "The impressive thing about Tesco's results is that its market share is about at its lowest in the last 24 months.

"If you look at Tesco's profits for the last five years, despite losing around 1% of the market, its profits have grown and the rate of growth has improved."

Ian Forrest, investment research analyst at The Share Centre, said the performance was a "validation of the strategy adopted four years ago by chief executive Dave Lewis".

Amisha Chohan, equity research analyst at Quilter Cheviot, said the results were "better than expected", adding: "The probability of the Asda and Sainsbury's merger has dramatically reduced, which we believe is partially deemed as positive for Tesco. However, remember that the biggest threat to the large supermarkets are the discounters, such as Aldi and Lidl."

The supermarket said its annual profit margin of 3.45% showed "clear progress" and meant it was "comfortably in the aspirational range" Mr Lewis set four years ago.

Group sales rose 11.5% to £56.9bn and the company recorded its 13th quarter of like-for-like sales growth in its main UK market, with a 1.7% increase in the final quarter.

It declared a dividend of 5.77 pence per share, up 92%.

Tesco shares closed 3.6% higher on Wednesday.