Tesco moved back into profit last year with an operating profit of £1 billion for the 52 weeks to 27 February. That compares to a loss of £5.8bn the year before when it wrote off some £6.7 billion of exceptional items.
In its UK business working capital improved by £400 million driven by a £300 million reduction in inventory. UK like-for-like sales were up 0.9 per cent in the fourth quarter marking a return to growth.
A review of the food categories resulted in an 18 per cent range reduction. Stock was reduced by ten per cent giving clearer back rooms, while sales-based availability was 96 per cent – a record for Tesco.
In the international operations, Tesco reduced stock days by six days, at the same time showing volume growth and gaining market share in five of the seven markets it is active in.
It delivered some £400m of cost savings – the target for its initial cost saving programme. The retailer also reduced its total indebtedness by £6.2 billion to £15.5 billion.
Chief executive Dave Lewis said: “We have made significant progress against the priorities we set out in October 2014. We have regained competitiveness in the UK with significantly better service, a simpler range, record levels of availability and lower and more stable prices. Our balance sheet is stronger and we are making good progress in rebuilding trust in Tesco and our investment case. Our process of transformation has generated broad -based positive momentum in the UK and internationally. We set out to start rebuilding profitability while reinvesting in the customer offer, and we have done this.”