Tesco Plc (TSCDY) posted a mixed set of full year results Wednesday as the U.K.'s biggest food retailer continues to fight through a fiercely competitive market that is being hit hard by rising prices and flat domestic wages.
Tesco said its full-year profits, before exceptional items, came in at £1.28 billion ($1.6 billion), a figure that was largely in-line with analysts' expectations but up 30% from the previous full year period. Operating profits were tabbed at £1.01 billion, the company said, while its diluted earnings per share was reported at 81 pence, just shy of the 85 pence estimate forecast by analysts.
Tesco said overall group sales rose 4.3% to £49.9 billion, while like-for-like sales in the domestic U.K. market edged 0.9% higher for their first gain in more than five years. Like-for-like food sales, Tesco said, rose 1.3% from the previous full-year period.
"Today, our prices are lower, our range is simpler and our service and availability have never been better. Our exclusive fresh food brands have strengthened our value proposition and our food quality perception is at its highest level for five years. At the same time, we have increased profits, generated more cash and significantly reduced debt," said CEO Dave Lewis. "We are ahead of where we expected to be at this stage, having made good progress on all six of the strategic drivers we shared in October. We are confident that we can build on this strong performance in the year ahead, making further progress towards our medium-term ambitions."
Tesco also said it planned to reintroduce dividend payments in the 2017/2018 fiscal year, "with aim of achieving target cover of around two times EPS over the medium-term."
The group also trimmed its overall debt position by 27% from the previous year to £3.73 billion, the company said.
Tesco shares, however, fell more than 5% by mid-day in London to change hands at 185.85 pence each, extending a three-month loss to more than 10% against a 1.32% gain for the FTSE 350 General Retailers Index.