Tesco steps up fight with Aldi and Lidl

Bosses seek to build on best sales for a decade

TESCO boss Dave Lewis declared his turnaround of the supermarket chain was bang on track as he stepped up his battle with Aldi and Lidl.

Reporting the best sales figures for a decade, the 53-year-old said he is close to completing a total revamp of the budget food range as he takes on the German discounters.

The former Unilever executive also said he was happy with the performance of the two new Jack’s stores Tesco opened last month.

So far the supermarket has overhauled more than 5,000 out of 10,000 of its own-brand products, which it says are cheaper than those at Aldi and Lidl.

Lewis said: ‘We are now more than halfway through the biggest own brand relaunch in our nearly 100- year history, including a significant investment in over 300 new ‘Exclusively at Tesco’ products at market-leading prices.

‘It’s taken us three years to get our corporate brand, our supplier relationships and our own label ready to be able to execute the brand in the way we’re now doing and you’ll see it come to life in the next couple of weeks.’

But shares fell 8.6pc, or 20.2p, to 215p, wiping £2bn off its value, after profits for the first half of the year came in lower than expected.

Operating profits rose 24pc to £933m in the 26 weeks to August 25. Investors were hoping for £978m.

Analysts said investors had been too harsh.

Neil Wilson, at Markets, said: ‘This looks rather like expectations had maybe been set a little too high, rather than Tesco underperforming. Dave Lewis should probably pat himself on the back – the turnaround and his focus on core retailing is working.’

Tesco said same-store sales in the UK and Ireland grew 4.2pc in the second quarter, its best performance for a decade.

It marked Tesco’s 11th quarter in a row of rising same-store sales and put a rocket under group revenues which climbed 12pc to £31.7bn.

Wholesaler Booker, bought by Tesco for £3.7bn this year, saw sales jump 14.7pc.

But Tesco took a £32m hit from its business in Poland after the country banned almost all shops from opening on Sundays. It also struggled in Thailand, its most profitable division after the country banned welfare cards for the poor being used at international stores.

On Jack’s, Lewis said: ‘Consumer feedback is really very good,’ said Lewis. ‘So far, so very, very good.’ Two more of the stores open in Liverpool today.