Tesco begins new chapter as Dave Lewis calls time on sell-offsComments Off on Tesco begins new chapter as Dave Lewis calls time on sell-offs
Tesco has delivered its second straight quarter of growth for the first time in five years as boss Dave Lewis called time on his string of sell-offs.
Its farm brands helped the UK’s biggest supermarket beat first-quarter forecasts, with same-store sales up 0.9% for the group and 0.3% in the UK.
Lewis, brought in two years ago to revive Tesco after a string of profit warnings, also announced the sale of coffee chain Harris + Hoole to Caffè Nero.
This is his third deal in as many weeks as he declared Tesco had reached the end of the “second chapter” of its turnaround.
He earlier sold off the garden centre chain Dobbies, Giraffe Restaurants and a 95% stake in Turkish business Kipa to refocus the business on supermarkets. “For now we feel like we’ve got a portfolio we can and will put all our efforts into improving,” he said.
He praised the farm brands, which replaced its Everyday Value basics range and carry fictitious names such as Rosedene and Boswell, despite the charge they may mislead customers.
Their contribution meant Tesco outperformed the market on fresh produce and meat by 5% and Lewis pointed out that overall sales grew, despite the products making typical shopping baskets 17%, or £1.60, cheaper than before. Two-thirds of customers have bought farm brand items so far.
They are partly responsible for Tesco’s recent resurgence against both traditional competitors such as Sainsbury’s, Asda and Morrisons, and discounters Aldi and Lidl.
Lewis said: “Eighteen months ago we were losing customers to everyone in the market, now we are at the stage where we are attracting customers from across the market.”
Bruno Monteyne of Bernstein Research said it was another good set of results and that “despite all the fears of Asda, Amazon and Aldi, Tesco’s recovery remains on track”.
Tesco shares rose 2.85p to 169.3p.
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