Tesco set to reveal rise in profits amid Booker scrutiny

Slow climb back
Slow climb back

Tesco is expected to report a rise in full year profits next week but the supermarket faces growing shareholder scrutiny of its proposed £3.7 billion takeover of Booker.

Analysts at HSBC expect the grocery giant to report annual pre-tax profits of £464 million on Wednesday, up from £162 million last year, as chief executive Dave Lewis continues to lead the group’s recovery.

Total sales, including international, are forecast to remain broadly flat at £54.8 billion in the year to February.

Mr Lewis has been hailed for beginning to turn Tesco around after the disastrous reign of his predecessor, Philip Clarke - which saw profits slide, market share eroded and an accounting scandal dog the supermarket giant.

HSBC’s David McCarthy said: “Tesco has made good progress across a wide spectrum. Ranges have been simplified, volume growth has been strong and a major cost-cutting programme has commenced. At the same time, there is much going on behind the scenes.

“Tesco outperformed the market heading into Christmas but has slipped back below the industry average. Nevertheless Tesco is the second best performer of the Big 4 this year in sales growth (lagging Morrison) and is the best performer in absolute terms.”

However, Tesco’s attempted merger with wholesaler Booker is expected to overshadow the results after a number of investors spoke out against the deal in recent weeks.