Shares in Tesco (LON:TSCO) have fallen into the red in today’s session, as the company’s first-half profit fell short of analyst estimates. Britain’s biggest grocer, however, nevertheless delivered a rise in profits, having benefitted from its recent acquisition of wholesaler Booker.
As of 08:24 BST, Tesco’s share price had given up 4.55 percent to 224.50p. The shares are underperforming the broader UK market, with the benchmark FTSE 100 index having climbed marginally into positive territory and currently standing 0.16 percent higher at 7,486.46 points.
Tesco posts interim results
Tesco announced in a statement this morning that its operating profit had surged 24.4 percent to £933 million in the first half of its financial year. City A.M., however, reported that the results had missed analyst expectations of £978 million. The blue-chip supermarket’s sales surged 12.8 percent to £28.3 billion, with UK like-for-like sales rising 2.3 percent and Booker’s LFL sales up 14.7 percent.
“We have made a good start to the year. The step up in Q2 is driven mainly by the UK & ROI and delivers our eleventh consecutive quarter of growth,” Tesco’s chief executive Dave Lewis commented in the statement, adding that the supermarket was ‘delighted’ with Booker’s performance. The grocer declared an interim dividend of 1.67p, up 67 percent year-on-year.
Analysts weigh in on update
The BBC quoted Bernstein retail analyst Bruno Monteyne, as commenting that Tesco’s first half figures showed a “strong sales momentum in Booker and UK food retail, but was soft on profitability”.
Richard Lim, chief executive of Retail Economics, meanwhile told City A.M. that those were “solid results which have no doubt been buoyed by the extraordinarily hot summer,” and that while the “the integration of Booker remains in embryonic stages, there is still considerable upside to come”.