Tesco shines in home market, beats annual profit forecast

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A Tesco supermarket in Glasgow, Scotland.

Tesco beat expectations with a 28 percent rise in full-year profit on Wednesday, helped by a strong end to the year in its home market, underlining the recovery of Britain’s biggest retailer under Chief Executive Dave Lewis.

The supermarket group, which is expanding to provide food to restaurants, bars and smaller rivals with a 4 billion pound ($5.7 billion) purchase of wholesaler Booker, made an operating profit of 1.644 billion pounds in the year to Feb. 24.

That compared to Tesco’s guidance of “at least” 1.575 billion pounds and 1.28 billion pounds made in 2016-17.

Shares in Tesco were up 3.6 percent at 0715 GMT.

“We are generating significant levels of cash and net debt is down by almost 6 billion pounds over the last three years,” Lewis said. “All of this puts us firmly on track to deliver our medium-term ambitions.”

Lewis joined Tesco in 2014, tasked with turning around a market leader which was battling a fall in sales and profits due to changing shopping habits and the rise of German discounters Aldi and Lidl.

An accounting scandal, uncovered shortly after his arrival, then plunged the group into the worst crisis in its near 100-year history.

Lewis first stabilized Tesco, then got it growing again with a focus on more competitive prices, new and streamlined product ranges, better customer service and much-improved supplier relationships.