Preliminary Results 2018/19


On a continuing operations basis

  Change at
constant rates

Change at actual rates
Headline measures1:          
Group sales2 £56.9bn £51.0bn3   11.3% 11.5%
Group operating profit4 £2,206m £1,646m3   33.5% 34.0%
Diluted EPS before exceptional and other items5 15.40p 11.90p     29.4%
Dividend per share 5.77p 3.00p     92.3%
Retail operating cash flow6 £2,502m £2,773m     (9.8)%
Net debt6,7 £(2,863)m £(2,625)m     up (9.1)%
Statutory measures:
Revenue £63.9bn £57.5bn   11.0% 11.2%
Operating profit £2,153m £1,839m   16.7% 17.1%
Profit before tax £1,674m £1,300m   28.3% 28.8%
Diluted EPS 13.55p 12.11p     11.9%

*Note: Booker consolidated from completion date of 5 March 2018 and therefore included in the 2018/19 figures for 51 weeks


  • Group sales2 £56.9bn, +11.5%
    • UK & ROI LFL sales8 +2.9% incl. Tesco UK +1.7% and Booker +11.1%
    • Central Europe LFL sales8 (2.3)%: fewer trading days and less general merchandise
    • Asia LFL sales8 (6.2)%: improvement to (3.0)% in 4Q
  • Group operating profit4 £2,206m, +34.0%
    • UK & ROI £1,537m, +45.1%; incl. £196m Booker (last year: £185m9) and £79m synergies
    • Central Europe £186m, +56.3%: significant cost reductions and improved profit mix
    • Asia £286m, (4.3)%: supplier negotiations concluded and significant restructuring complete
    • Bank £197m, +16.6%: strong banking performance and one-off contract renewal benefit10
  • Group operating margin3.45%; 2H operating margin4 3.96% (3.79% excl. Booker)
  • Retail operating cash flow6 £2.5bn: c.£(490)m working capital timing impact year-on-year
  • Retail free cashflow of £906m: impacted y-o-y by working capital timing, higher tax and market purchases of shares
  • Net debt6,7 £(2.9)bn: increased by £(238)m after £(766)m Booker cash consideration
  • Final dividend 4.10p, giving FY dividend of 5.77p – now expect to reach c.2.0x EPS cover11 in 2019/20
  • Statutory revenue +11.2% to £63.9bn; operating profit +17.1% to £2,153m; profit before tax +28.8% to £1,674m

Further progress against each of our six strategic drivers

  • Brand health12 continues to strengthen; quality perception +1.9 points and value perception +1.3 points13
  • In-year cost savings £532m; savings of £1.4bn to date towards £1.5bn target
  • Generated £2.5bn retail operating cash6; £8.6bn retail operating cash14 generated over three years
  • Improving the mix across geographies, channels and product; closure of Tesco Direct; less general merchandise in CE 
  • Released a further £285m value15 from property; three store buybacks in Cirencester, Stroud and Shepton Mallet
  • Innovations including 10,000 own brand product relaunch; eight new ‘Exclusively at Tesco’ brands; launch of Jack’s

Dave Lewis, Chief Executive:

“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. The full year margin of 3.45% represents clear progress and the second half level of 3.79%, even before the benefit of Booker, puts us comfortably in the aspirational range we set four years ago.

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.”

Like-for-like sales performance8

UK & ROI 3.5% 4.2% 1.9% 1.9%   3.8% 1.9%   2.9%
2.1% 2.5% 0.7% 1.7%   2.3% 1.2%   1.7%
  ROI 3.0% 3.1% (0.2)% (0.4)%   3.1% (0.3)%   1.3%
  Booker 14.3% 15.1% 11.0% 4.3%   14.7% 7.6%   11.1%
Central Europe (1.0)% (2.0)% (3.0)% (3.0)%   (1.5)% (3.0)%   (2.3)%
Asia (9.0)% (4.8)% (8.0)% (3.0)%   (7.0)% (5.4)%   (6.2)%
Group 1.8% 2.7% 0.5% 0.9%   2.2% 0.7%   1.4%

Headline Group results

A full Group income statement can be found on page 14.

52 weeks ended 23 February 2019 

On a continuing operations basis
  Year-on-year change 
exchange rates)
  Year-on-year change 
exchange rates)
Group sales (exc. VAT, exc. fuel)2 £56,883m   £50,993m   11.3%   11.5%
Fuel £7,028m   £6,500m   8.1%   8.1%
Revenue (exc. VAT, inc. fuel) £63,911m   £57,493m   11.0%   11.2%
Group operating profit4 £2,206m   £1,646m   33.5%   34.0%
- UK & ROI £1,537m   £1,059m   45.0%   45.1%
- Central Europe £186m   £119m   56.3%   56.3%
- Asia £286m   £299m   (6.7)%   (4.3)%
- Tesco Bank £197m   £169m   16.6%   16.6%
Include exceptional items and amortisation of acquired intangibles £(53)m   £193m        
Group statutory operating profit £2,153m   £1,839m   16.7%   17.1%
Group profit before tax before exceptional items, amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments £1,958m   £1,284m       52.5%
Group statutory profit before tax £1,674m   £1,300m       28.8%
Diluted EPS before exceptional items, amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments 15.40p   11.90p        29.4%
Statutory diluted EPS 13.55p   12.11p        
Statutory basic EPS 13.65p   12.15p        
Dividend per share 5.77p   3.00p       92.3%
Capex 16 £1.1bn   £1.1bn        
Net debt 6,7 £(2.9)bn   £(2.6)bn        
Cash generated from retail operations 6 £2.5bn   £2.8bn        


  1. The Group has defined and outlined the purpose of its alternative performance measures, including its headline measures, in the Glossary on page 58.
  2. Group sales exclude VAT and fuel. Sales growth shown on a comparable days basis and includes an adjustment to last year’s figures to reflect a change in reporting of consignment sales.
  3. Last year figures restated for impact of IFRS 15 ‘Revenue from contracts with customers’. Impacts include a £2m increase in revenue and operating profit.
  4. Excludes amortisation of acquired intangibles and excludes exceptional items by virtue of their size and nature in order to reflect management’s view of underlying performance.
  5. Headline earnings per share measure excludes exceptional items, amortisation of acquired intangibles, net pension finance costs and fair value remeasurements of financial instruments. Full details of this measure can be found in Note 9, starting on page 38.
  6. 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.
  7. Net debt includes both continuing and discontinued operations.
  8. 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).
  9. In the current year, Booker is consolidated for 51 weeks. Booker operating profit last year is adjusted to reflect a comparable 51 week period and to exclude property profits. Previously referenced profit of c.£195m last year reflects the 53 weeks to 30 March 2018.
  10. Relates to £13m up-front recognition of insurance renewals following a contract renewal with our pet insurance provider, as required by IFRS 15.
  11. On a post-IFRS 16 basis.
  12. As per YouGov BrandIndex (customers recommend) February 2019.
  13. Reflects year-on-year change in YouGov Brand perception measures of quality and value.
  14. Cumulative retail cash generated from operations excluding pension deficit repayments, cash outflows relating to SFO fine and shareholder compensation scheme payments and cash
    payments in lieu of colleague bonus shares.
  15. Value released from property relates to gross proceeds from property disposals in the year.
  16. Capex is shown excluding property buybacks. Statutory capital expenditure (including property buybacks) for the 52 weeks ended 23 February 2019 was £1.2bn (LY £1.5bn).

Creating value for our key stakeholders

We have continued to make strong progress this year, guided by the six strategic drivers that we set out in October 2016, as we create long-term and sustainable value for our key stakeholders.


  • 149,000 more customers are shopping at Tesco1
  • continued improvement in Brand perception measures of quality (+1.9 points) and value (+1.3 points)2
  • introduced eight new ‘Exclusively at Tesco’ brands; relaunch of 10,000 own brand products
  • launched ‘Jack’s’ – a new brand and store format – as part of celebrating 100 years of great value at Tesco
  • refreshed Clubcard app in August with Faster Vouchers functionality; users up 34% year-on-year
  • offering Booker ‘bulk buys’ in 70 Tesco stores; wider roll-out to continue next year
  • unlocking benefits of ‘Joining Forces’ for Booker customers, with greater choice, lower prices and better quality
  • continued to work in partnership with Cancer Research UK, Diabetes UK and the British Heart Foundation to promote healthy living and support prevention and cure for the nation’s biggest health challenges
  • committed to making customers’ shopping more sustainable through long-term partnership with WWF


  • maintained colleague engagement: 83% recommend Tesco as a great place to work
  • implemented the third stage of a 10.5% increase for hourly paid store colleagues in November 2018
  • launched new Colleague Clubcard Plus, providing easier access to Tesco benefits in one place
  • conducted the UK’s largest ever workplace health survey, with over 8,000 colleagues taking part
  • further simplified our operations, making changes to stores and offices to enable investment in serving customers
  • new partnership with The Prince’s Trust, helping 10,000 young people to develop skills and employability
  • offered 1,193 new UK apprenticeships in areas such as HGV driving and food technology

Supplier partners

  • retailer with most improved supplier relationships for third successive year in June 2018 GCA survey
  • Supplier Viewpoint Group measure reached a high of 77.5%, up 260bps year-on-year
  • ranked first for the third successive year in the independently-run Advantage supplier survey
  • enabled suppliers to access higher level of combined UK sales growth through our merger with Booker
  • worked alongside 358 of our existing suppliers to create new ‘Jack’s’ brand with 1,800 products
  • working in partnership with Carrefour to identify opportunities in own-label, branded products and goods not for resale


  • delivered Group operating margin of 3.45%; 2H operating margin 3.96% (3.79% excl. Booker)
  • generated £2.5bn retail operating cash flow; £8.6bn retail operating cash generated over three years
  • retail free cashflow of £906m; impacted y-o-y by working capital timing, higher tax and market purchases of shares
  • announced final dividend of 4.10p per share taking full-year dividend to 5.77p per share; now expect to reach c.2.0x EPS cover3 in 2019/20
  • strategic repositioning of the Group: delivering faster growth through Booker; benefiting from long-term, strategic alliance with Carrefour; more sustainable general merchandise business, including closure of Tesco Direct in July
  • delivered Booker synergies ahead of plan; well on track to meet target of c.£200m p.a. by end of third year

Looking ahead

We are confident that we will meet the remaining goals in our turnaround plan in 2019/20 and deliver a level of profitability (pre-IFRS 16 and excluding Booker) within the 3.5%-4.0% margin range.

Whilst the market remains uncertain, our performance to date is strong, leaving us well-positioned to invest in our competitiveness as we continue to celebrate 100 years of great value for customers.  We remain comfortable with consensus profit expectations for 2019/20.

We are continuing to focus on customer satisfaction, cash profitability, free cash flow and earnings growth and are using these measures to inform our decisions as we look to create sustainable value for shareholders.

As a result of the progress we are making strengthening the balance sheet and delivering free cash flow we now expect to reach a dividend cover level of around two times earnings3 in the 2019/20 financial year.  We will maintain our focus on balance sheet strength, targeting a leverage range of 3 times to 2.5 times total indebtedness to EBITDAR3.

Forthcoming events

As we move beyond our medium-term ambitions, we plan to host a capital markets day on 18 June 2019 to share some of the ‘untapped value opportunities’ available for Tesco.  We will also hold an ESG-focused event on 26 June 2019.  Both events will be held at our Welwyn Garden City campus, with invitations being issued shortly.

We will be issuing full 2018/19 financial statements on an IFRS 16 basis on 29 April 2019, as described on page 13 below.


  1. KantarWorldpanel UK data for the 52 weeks ending 24 February 2019
  2. Reflects year-on-year change in YouGov Brand perception measures of quality and value.
  3. On a post-IFRS 16 basis.


Investor Relations: Chris Griffith 01707 912 900
Media: Christine Heffernan 01707 918 701
  Philip Gawith, Teneo 0207 420 3143

This document is available at

A meeting for investors and analysts will be held today at 9.00am at London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS.  Access will be by invitation only.  For those unable to attend, there will be a live webcast available on our website at This will include all Q&A and will also be available for playback after the event.  All presentation materials, including a transcript, will be made available on our website.


This document may contain forward-looking statements that may or may not prove accurate.  For example, statements regarding expected revenue growth and operating margins, market trends and our product pipeline are forward-looking statements.  Phrases such as "aim", "plan", "intend", “should”, "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended to identify forward-looking statements.  Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to Tesco as of the date of the statement. All written or oral forward-looking statements attributable to Tesco are qualified by this caution.  Tesco does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances.

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