Tesco shares slump after its half-year results miss expectations

Progress: Tesco chief Dave Lewis TESCO shares have tumbled despite the supermarket giant posting rising half-year profits and its best sales hike for more than a decade.

The retailer, which owns around 50 stores in Northern Ireland, saw shares drop more than 8% as a 24.4% surge in group-wide half-year earnings to £933m missed market expectations.

But Tesco hailed a “good start to the year” after UK and Ireland like-for-like sales rose 3.8% in the first half to August 25, with a marked improvement to 4.2% over the last three months.

In the UK alone, comparable sales were up 2.3% in the second quarter. It marked the group’s 11th quarter in a row of rising like-for-like sales and the first time sales have risen past 4% for more than 10 years.

The recently-acquired cashand-carry business Booker also provided a boost, with first-half sales in the chain powering 14.7% ahead.

In the UK and Ireland, Tesco notched up a 47.6% jump in underlying operating profits to £685m, £97m of which was linked to Booker.

However, Tesco saw statutory earnings fall 6.5% to £819m as it booked exceptional costs linked to the closure in July of its non-food online business Tesco Direct. Statutory group pretax profits rose 2% to £56m or 2.2% higher on a constant currency basis.

Chief executive Dave Lewis said: “We have made a good start to the year. The step up in the second quarter is driven mainly by the UK and Republic of Ireland and delivers our 11th consecutive quarter of growth.

“At the same time, we have made further strategic progress. We completed our merger with Booker in March and are delighted with performance so far.”

Tesco finalised the £3.7bn deal earlier this year, and the group has been moving quickly to integrate the two businesses.

It also recently launched a discount store format — Jack’s — as it aims to take on German discounters Aldi and Lidl.