City toasts Tesco’s turnaround king

Dividend is doubled as profits jump 29pc to £1.7bn

Tesco chief executive Dave Lewis said the supermarket’s turnaround is close to completion as he unveiled a bumper 29pc rise in profits.

Britain’s biggest grocer rewarded investors by almost doubling its dividend to 5.77p per share after raking in £1.7bn of profits in the year to February 23.

same-store sales rose 1.4pc to boost total revenues by 11.2pc to £63.9bn.

Lewis, who uncovered a £250m accounting scandal at Tesco just two weeks after arriving from Unilever, hailed his turnaround as nearing the end.

‘After four years we have met, or are about to meet, the vast majority of our turnaround goals,’ he said. ‘I’m very confident that we will complete the journey in 2019/2020. I’m delighted with the broad-based improvement across the business.’

The 54-year-old’s bullish tone sparked speculation that he could be looking to leave the top job at Tesco.

Lewis has been credited with making the supermarket popular among customers again after the fraud and a string of profit warnings shattered its reputation.

Russ Mould, investment director at AJ Bell, asked: ‘Will Dave Lewis ride off into the sunset now he is achieved, in his own words, “the vast majority” of his turnaround goals?’

Neil Wilson, chief market analyst at online trading platform Markets, added: ‘Job done: Tesco can confidently say the turnaround under Dave Lewis is as good as complete.’

But Lewis denied he was looking to move on from the supermarket, insisting that there was more work to be done.

He added that Tesco will outline further plans for its future in June, raising the possibility of a share buyback for investors.

‘The job is not done,’ Lewis said. ‘As a team we’re completely committed to what comes next.’

Lewis, nicknamed Drastic Dave for his ruthless cost-cutting while at Unilever, implemented a dramatic shake-up when he arrived at Tesco almost five years ago.

He has overseen a £3.7bn merger with cash-and-carry firm Booker, carried out the biggest overhaul of Tesco’s own-brand range in its 100-year history and launched its own budget supermarket, Jack’s, in an effort to take on German discounters Aldi and Lidl.

But he has been forced to make difficult decisions in recent months with 9,000 jobs now on the line as part of a major costcutting drive.

cuts are expected at Tesco’s head office and in stores as it prepares to close deli counters at around 70 of its supermarkets.

Lewis said the move was likely to result in around 4,500 redundancies but warned more could be on the way.

‘The cuts are a reflection of change in customer behaviour. It’s very impactful when we make a change like this. There will be more changes, we’ll work them through,’ he said.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said Lewis deserved praise for steering Tesco through a difficult period.

‘He took over a business that was reeling from the inroads made by Aldi and Lidl into the UK supermarket sector, and one of the first things on his plate was dealing with an accounting blunder,’ he said.

‘Five years down the road and the supermarket has rebuilt profits and dividends, and gathered consistent sales momentum. It’s now in much better shape to deal with the challenges it faces.’

Tesco’s shares rose 3.6pc, or 8.4p, to 242.3p.

MoRRIsoNs chief executive David Potts was handed £1.1m worth of shares as part of the supermarket’s incentive plan. He was given 508,460 shares which were worth more than a million as of last night’s closing price.