Tesco is sticking to its plans after its profits fall

The new boss of Tesco, Britain’s biggest retailer by sales, backed the strategy of his predecessor on Wednesday, despite a drop in first-half core profit as Covid-19 costs and losses at Tesco bank outweighed a surge in sales.

Cork man Ken Murphy, who was formerly at healthcare group Walgreens Boots Alliance, succeeded Dave Lewis on October 1.

“I think you can take it that I’m really happy with the strategy and direction of the company, unless you actually see it changing in the stores,” Mr Murphy told reporters.

“My job is to maintain momentum in the business and keep us focused on delivering a brilliant Christmas,” the Corkonian said.

Mr Murphy said it was too early to talk about longer term strategic opportunities. But he said he had no plans to exit any more overseas markets or sell Tesco Bank, which swung to a first half loss as it braces for a surge in virus-related bad debts.

In his six years at the helm, Lewis put Tesco back on track after an accounting scandal and refocused the group on its home market.

Tesco still faces major challenges, most notably the economic impact of the pandemic and potential disruption when the Brexit transition period finishes at the end of 2020.

Shares in Tesco, which has a 27pc share of Britain’s grocery market, went sideways during Lewis’ tenure and last week the group briefly lost its position as Britain’s most valuable food retailer to online specialist Ocado.

The stock was up 2.2pc, paring 2020 losses to 14.3pc, after the group forecast that retail operating profit in the full 2020-21 year would be at least the same level as 2019-20 – a slight forecast upgrade.

Tesco made group operating profit before one-off items of £1.04bn (€1.14bn) in the 26 weeks to August 29, down from £1.23bn in the same period last year. Retail operating profit rose 4.4pc.

UK like-for-like sales jumped 7.6pc as shoppers continued to eat more at home due to coronavirus-related restrictions on socialising, having been up 8.7pc in the first quarter.

However, the cost of coping with the pandemic – including extra staff – amounted to £533m.

Tesco Bank made a loss of £155m due to debt provisions.