Dave Lewis could finally be reaping the rewards from his 2014 turnaround plan, according to some pretty positive analysts’ predictions. Tesco is expected to reveal a return to full-year profits and its first quarter of underlying sales growth for more than three years in its results on Wednesday.
House broker Barclays is predicting a 0.8% increase in sales at established UK stores for the three months to Feburary – maintaining the momentum from an unexpected 1.3% rise in underlying sales over Christmas.
The supermarket is expected to post pre-tax profits of £447m for the year to the end of February – a big improvement after announcing one of the biggest losses in UK corporate history last year - a massive £6.4bn. Though it’s still a fair way from clambering pack to its former perch. The improvement in profits is predominantly be due to not having to deal with the hefty impact of the £4.7bn of property write-downs Tesco took the year before, when fewer customers visited its out of town supermarkets.
Its welcome news for Lewis who had the substantial challenge of steadying the ship following Philip Clarke’s sacking and the supermarket’s mammoth accounting scandal. That’s not to say Tesco is out of the woods – a recent update from Kantar had Aldi and Lidl continuing to sap market share, mostly from Tesco, Asda and Morrisons. The price war has been tough going for Tesco (not to mention suppliers) and that shows no sign of abating.
And Lewis is well aware there’s more spring cleaning to be done. According to Sky News, he’s drawing up plans for a clear out of loss-making businesses such as Dobbies Garden Centres as well as restaurant chain Giraffe, to further focus on Tesco’s core operations. So while Wednesday’s results should give Lewis a moment of respite from his quest to improve the supermarket’s stretched balance sheet, he’ll need those sleeves rolled up for a while longer yet.