Interim Results 2017/18

4 October 2017

Staff member helping shopper


Positive sales2 and profit3 growth, strong cash5 generation

  • Group sales2 up 3.3% to £25.2bn – seventh consecutive quarter of growth
  • UK like-for-like sales7 up 2.2%; transactions up 0.4%; volumes8 up 0.3%
  • Strong fresh food volume growth in the UK of 1.5% driven by ongoing improvements in our offer
  • Group operating profit before exceptional items3 up 27.3% to £759m; UK & ROI up 21.1% to £471m
  • Group operating margin3 up to 2.7% from 2.2% last year; on track for 3.5-4.0% ambition by 2019/20
  • Improved profit margin in Central Europe (up 132 basis points) and in Asia (up 146 basis points)
  • Retail operating cash flow5 up 19.3% to £1.1bn; Retail free cash flow5 of £586m
  • Triennial pension review concluded; annual contributions to increase by £15m to £285m from April 2018
  • Interim dividend of 1.0p per share reflects improved performance and Board confidence
  • Statutory revenue up 3.7% to £28.3bn; Profit before tax up £491m to £562m

Further progress against each of our six strategic drivers

  • Brand health9 continues to strengthen; voted ‘Britain’s favourite supermarket’ for 3rd consecutive year10
  • Further cost savings of £259m achieved in 1H towards the £1.5bn medium-term target; £485m to date
  • Generated £1.1bn of retail operating cash5; £237m underlying working capital11 inflow
  • Improving the mix across geographies and channels; 1.6% like-for-like sales growth in our UK Extra format
  • Released a further £175m value12 from property; 50 sites sold; 0.4m sq. ft. space re-purposed
  • Innovations including launch of contactless Clubcard; nationwide roll-out of same day delivery service; further 807 new products introduced

1. The Group has defined and outlined the purpose of its alternative performance measures, including its headline measures, in the Glossary on page 51.

2. Group sales exclude VAT and fuel. Sales growth shown on a comparable days basis.

3. Excludes exceptional items by virtue of their size and nature in order to reflect management’s view of the performance of the Group.

4. Headline earnings per share measure redefined to exclude IAS 39 fair value remeasurements as well as exceptional items and IAS 19 finance costs. Full details of this measure can be found in Note 9, starting on page 36.

5. Net debt, retail operating cash flow and retail free cash flow exclude the impact of Tesco Bank in order to provide further analysis of the retail cash flow statement.

6. Net debt includes both continuing and discontinued operations.

7. Like-for-like is a measure of growth in Group online sales and sales from stores that have been open for at least a year at constant foreign exchange rates.

8. Excludes tobacco and fuel.

9. As per YouGov BrandIndex August 2017.

10. ‘Britain’s favourite supermarket’ awarded at the Grocer Gold Awards ceremony on 13 June 2017.

11. Working capital excluding the impact of exceptional items.

12. Value released from property relates to gross proceeds from property disposals in the half.

13. Capex is shown excluding property buybacks. Statutory capital expenditure (including property buybacks) for the 26 weeks ended 26 August 2017 was £0.6bn (LY £0.5bn).