Tesco on track for 'turnaround' as sales and profits rise

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Alastair Lockhart, insight director at shopper marketing agency Savvy, said Tesco's reintroduction of a dividend is the latest in a series of milestones that confirms not only momentum, but pace in the retailer's recovery.

Investment commentators welcomed Tesco's announcement this morning that it is reinstating its dividend three years after an accounting scandal plagued the supermarket giant.

The last time this happened was in the 2014-15 financial year, weeks before Tesco became embroiled in an accounting scandal that saw it overstate profits by £326 million.

It remains 'firmly on track to reduce our costs by £1.5 billion, generate £9 billion of retail cash from operations and improve operating margins to between 3.5% and 4.0% by 2019/20'.

Mr Lewis said that Tesco was "shocked" by the discovery and that the supermarket had audited the factory's food quality commitments.

Tesco boss Dave Lewis has hailed a "significant milestone" in the firm's turnaround after unveiling the first dividend payout for three years following a surge in half-year profits and sales.

Tesco (TSCO) has announced its first dividend since it was plunged into crisis by the revelation of a £263 million black hole in its accounts, after a 27% jump in first-half profits.

"[This] reflects our confidence that we can build on our strong performance to date and in doing so, create long-term, sustainable value for all of our stakeholders", said Mr Lewis.

According to analysts, Tesco [IRDX RTSC] is ahead of the game in the United Kingdom with apps and the work it has done on mobile is likely to see it continue to perform well and bring the fight to other grocery retailers.

"As the trial begins of three former senior executives accused of cooking the books during Tesco's bad old days, this barnstorming result shows how far the turnaround has come".

Regarding its proposed 3.7 billion pounds merger with wholesaler Booker, the company said the merger is now undergoing an in-depth "Phase 2" investigation by the Competition and Markets Authority or CMA.

"After seven consecutive improvements in like-for-like sales, Tesco has finally reinstated the shareholder dividend in the clearest sign yet that the rot has been stopped".

Tesco said that despite "challenging" market conditions, it had "worked hard to minimise price increases". Operating profit was up 67.4 per cent from £515m to £885m.

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