Tesco’s profits have soared 29 per cent despite an uncertain market as the store continues its impressive turnaround.
Chief executive Dave Lewis said there was little sign of customers stockpiling ahead of Brexit and that shoppers were becoming tired with the issue.
His strategy of slashing prices and simplifying the range of products at the UK’s biggest retailer looked to have paid off, with revenues up 11.2 per cent to £64bn.
Comparable sales increased 2.9 per cent, while revenues at wholesaler Booker, which Tesco acquired in 2016, jumped 11 per cent.
The results come at a difficult time for the retail sector as consumer confidence takes a knock from Brexit worries.
In addition, supermarkets are battling rising costs and fierce competition in the sector as Lidl and Aldi continue their relentless march.
Mr Lewis, who took over as chief executive after Tesco uncovered a huge accounting scandal four years ago, said the company had now met the “vast majority” of its turnaround goals.
“I’m delighted with the broad-based improvement across the business,” he said.
“We have restored our competitiveness for customers – including through the introduction of ‘Exclusively at Tesco’ – and rebuilt a sustainable base of profitability.”
The cost-cutting at Tesco has not been painless, with up to 9,000 jobs at risk under plans announced in January.
And the company could face stiffer competition if a proposed £12bn merger between Sainsbury’s and Asda gets the green light from regulators.
The biggest threat to Tesco comes from the growing appeal of the discount chains Aldi and Lidl which are rapidly attracting new shoppers throughout the UK.
To counter their rise, Tesco last year launched its own cut-price chain, Jack’s.
Julie Palmer, partner at business consultancy Begbies Traynor, said: “External threats are also putting pressure on the retailer with continued uncertainty due to Brexit and the turbulent high street conditions, evidenced by its decision to cut up to 9,000 jobs by shutting the fresh food counters at 90 stores.
“With Marks & Spencer’s tie-up with Ocado and Amazon’s new grocery arm, Amazon Fresh, Dave Lewis will be wary of standing still and instead will want to keep moving.”