Tesco Half-Year Profits Fall 55% To £354m

Tesco has reported a 55% hit to half-year operating profits as its chief executive bids to turnaround the supermarket chain's fortunes.

The company, which has been battling the effects of a price war with rivals and the fallout from a profits overstatement, said it made £354m in the six months to 29 August - down from £779m in the first half of its last financial year.

Dave Lewis has made improving the customer experience a priority - cutting 53 unprofitable stores as part of his investment plan to win customers back from discounters.

He said restructuring savings of £400m for the year were on track and the money was being pushed towards its in-store offering.

Tesco continued its steady improvement in trading during the period, with UK like-for-like sales falling by just 1.1%, but it warned the market remained challenging.

Mr Lewis said: "We have delivered an unprecedented level of change in our business over the last twelve months and it is working.

"The first half results show sustained improvement across a broad range of key indicators.

"In the UK, we continue to improve all aspects of our offer for customers, resulting in volume growth which is allowing us to create a virtuous circle of investment."

The turnaround plan is being executed at the same time as the company faces a Serious Fraud Office (SFO) inquiry into its accounting problems.

Sky News reported on Tuesday that Tesco had been holding secret talks with SFO officials to settle its criminal probe.

The SFO's inquiry was launched after it emerged that there was a £263m shortfall in Tesco's profits - a figure that was subsequently revised upwards to £326m.

Tesco attributed the problems to irregularities relating to supplier payments.

Its share price, which was 2.4% higher in the year to date, fell more than 1% in early trading on the FTSE 100 on Wednesday.