Tesco shares rise as FY'18 earnings beat expectations | Progresiv
Tesco PLC's shares climbed more than 6% on April 11 after the British supermarket operator reported full-year fiscal 2018 earnings that beat expectations as a turnaround strategy helped drive improved performance. 
The U.K.'s largest grocery retailer by market share reported that earnings per share for the 52 weeks ended Feb. 24 jumped to 12.08 pence from 0.81 pence in the 52 weeks to Feb. 25, 2017. That was ahead of the S&P Capital IQ consensus estimate for normalized EPS of 11 pence.
Net income was 857 million pounds versus a net loss of 40 million pounds, while revenue increased 2.8% year over year to 57.49 billion pounds from 55.92 billion pounds.
"We are well on track with our plans," CEO Dave Lewis told journalists during an April 11 conference call.
Reflecting this, the company proposed an annual dividend of 3 pence per share, after not offering one the prior year.
In early morning trading in London, Tesco's shares were up 13.3 pence, or 6.3%, at 223.60 pence.
Tesco did not provide figures for its fiscal fourth quarter, although it said in a statement that like-for-like sales had increased for a ninth consecutive quarter. In the U.K., Tesco's biggest market, like-for-like sales rose 2.2% year over year due to consistent strength in the fresh food category, offsetting a 0.4% drag from general merchandise.
"[Food] is the core of our business and our engine for growth," Lewis said.
Its own brands performed well, with like-for-like growth of 4.2%. "Our new, exclusive Hearty Food Co. range of ready meals and improved core Tesco products have proved particularly popular, contributing to an increase in overall own brand participation of nearly 1%," Tesco said.
Tesco saw like-for-like sales growth across all its formats. Sales increased 2.7% in its convenience shops and 1.9% in larger stores. Online orders jumped 5.1%, with higher order numbers and average basket sizes. Tesco now offers same-day delivery to 99% of U.K. homes.
Operating margin gained 57 basis points year over year to 2.9%. During the second half of the fiscal year, operating margin was 3%, up 64 basis points year over year. The company is targeting an operating margin of 3.5% to 4% by 2019-20. Its medium-term ambitions, set out in October 2016, also include a commitment to cut costs by 1.5 billion pounds and to generate 9 billion pounds of cash from operations of the retail business. (www.spglobal.com)
