Shares in Tesco (LON:TSCO) have jumped more than one percent in London in early morning trade, as Britain’s blue-chip grocer restored its dividend, about three years after it was hit by an accounting scandal. The move came as the company updated investors on its interim performance, unveiling that its sales and profit recovery had continued in the first six months of its financial year.
As of 08:07 BST, Tesco’s share price had added 1.22 percent to 192.38p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.05 percent higher at 7,471.81 points. The group’s shares have added nearly three percent to their value over the past year, but are down by some six percent in the year-to-date.
Tesco announced in a statement today that its sales had jumped 3.3 percent to £25.2 billion in the first half of its financial year, marking the seventh consecutive quarter of growth, while its like-for-like sales in the UK were 2.2 percent up. The company further delivered a 27.3-percent rise in operating profit before exceptional items to £759 million and unveiled plans for an interim dividend of 1.0p per share, reflecting ‘improved performance and Board confidence’.
“We are continuing to make strong progress. Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago,” the group’s chief executive Dave Lewis commented in the statement. “Today’s announcement that we are resuming our dividend reflects our confidence that we can build on our strong performance to date.”
Sanford Bernstein analyst Bruno Monteyne commented that the results showed that Tesco was recovering in the UK, while its troubled international operations were also improving.
“Total scorecard: Dave Lewis is really delivering,” he told the BBC’s Today programme, adding that although the restored dividend is modest, it sent an important signal and was a ‘sign of confidence’ from management about the supermarket’s prospects.