Tesco’s UK profits have crashed by nearly 70% according to the supermarket’s half-year interim results, announced today (Wednesday 7 October).
A total of £377m was wiped off its UK operating profit before exceptional items, with this figure plummeting from £543m in the first half of last year to £166m in the first six months of 2015.
The picture was not much better in the wider group, with operating profit before exceptional items down nearly 55% from £779m to £354m and sales down 1.9% to £23.94bn.
Light at the end of the tunnel?
However, there were indications that shoppers were starting to return to Britain’s biggest supermarket, with transactions up 1.5% and the volume of sales up 1.4%.
The supermarket has undergone big change since chief executive Dave Lewis was brought in last year to turn around its fortunes, including a cull of senior management, an increase in customer-facing roles and pledges to overhaul supplier relations.
So far this year, Tesco has made 500 price reductions on key lines, reduced the average number of products per range by 15% and closed 53 unprofitable stores.
The struggles at Tesco
Tesco has been struggling for some time in an increasingly competitive grocery market. Although it is still the UK’s biggest retailer – with 28.2% of the grocery market – discounters Aldi and Lidl, as well as Waitrose have been shaving off its market share.
Last year the supermarket issued four profit warnings and was put under investigation by the Serious Fraud Office for overstating its half-year profits by £326m.
It was subsequently investigated by the Groceries Code Adjudicator after the accounting scandal was linked to the way the supermarket was paying its suppliers. Both investigations are still under way.