British supermarket Tesco has returned to profit, after last year’s worst-ever £6.3bn loss. The company reported a £162m pre-tax profit for the year to 27 February and its best sales in more than three years.
Tesco has struggled in recent years after the accounting scandal of 2014 that saw the group overstate its profits by £263m.
In a bid to turnaround the business, Tesco has focused on serving its customers better using the slogan: “Serving shoppers a little better every day”. In response, customer satisfaction rose 5% in the last six months while like-for-like sales grew across the UK, Republic of Ireland, Europe and Asia.
The cost of an average weekly shop at Tesco in the UK has dropped by 3% while 2,000 new lines have been introduced. New beauty lines include several halal brands and Tesco’s first eau de toilette introduced last year.
CEO Dave Lewis said that the company had made “significant progress” in the past year and had “regained competitiveness” after recent financial struggles. He said: “We set out to start rebuilding profitability whilst reinvesting in the customer offer, and we have done this.”
However, despite these significant gains, Tesco admitted that the coming months would be a struggle as retailers across the UK face significant challenges. Lewis described the current retail market as “challenging, deflationary and uncertain”.
Tesco closed 60 unprofitable stores in the past year and has cut back on the number of locations with 24-hour opening hours. The company has also sold its South Korean business, Homeplus for £4.2bn last year, helping to reduce its deficit.
Reports emerged this week that Tesco was considering selling its additional chains Dobbies Garden Centres, Harris & Hoole coffee shops and Giraffe restaurants in a bid to further reduce its debts and streamline the business.
The retailer also took on rival Sainsbury’s in the price-cutting battle this week. Sainsbury’s announced the end of its long-standing brand match offer, which sees customers given store vouchers whenever a product could have been purchased cheaper elsewhere. In response, Tesco offered to accept its rivals coupons in its own stores.