City predicts Tesco recovery

The City expects the UK’s largest supermarket to reveal underlying full-year pre-tax profits down 3% to £932 million, a vast improvement on the 68% fall it reported a year ago.

Taking into account a massive writedown on the value of the supermarket’s property portfolio, it posted an overall £6.4 billion annual loss, as the group also saw sales collapse at its core UK business.

However, data last week from respected research body Kantar Worldpanel said Tesco improved its sales for the fourth month in a row, adding that sales slipped by just 0.2% in the 12 weeks to March 27.

This comes after the business reported a surprise 1.3% rise in like-for-like sales over the six weeks to January 9, covering the crucial Christmas period.

Analysts said the supermarket’s recent performance is a further sign that chief executive Dave Lewis is turning the massive business around, since taking over from previous boss Philip Clarke in September 2014.

The moves marks a welcome improvement after a grim couple of years, with Tesco uncovering a £326 million accounting black hole in autumn 2014 that plunged the group into crisis.

Trading across the sector has been hit amid falling food prices, compounded by a price war sparked by the increasing might of discounters Aldi and Lidl.