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Tesco's penny dividend fails to impress

Wednesday, October 04, 2017 - 01:48

Tesco is to resume paying a dividend for the first time in three years, with strong demand for fresh food and cost savings helping lift first-half profit by 27 percent. As Silvia Antonioli reports, Britain’s biggest retailer has been battling to recover from a 2014 downturn caused by an accounting scandal.

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It's hardly a lot but this is Tesco's best effort to say it's back from the brink Britain's biggest supermarket said it would pay a 1 penny dividend, the first payout since a 2014 accounting scandal that plunged it into its deepest crisis ever SOUNDBITE (English) Charles Stanley, Chief Investment Commentator, Garry White: "The dividend is trying to instill confidence. It's a one p. dividend....That's hardly spectacular. Margins today around about 2.5 percent. They have a target of getting them up to around 4 percent by 2020. I think that's a major challenge with competition from Amazon teaming up with Tesco, launching their own service. Aldi and Lidl now take almost one pound in every eight pound spent in UK supermarkets. That threat is going to continue to rise." The retailer posted a 27 percent rise in first half profit and its 7th straight quarter of sales growth in its home market. And that's with inflation rising. SOUNDBITE (English) Tesco CEO, David Lewis, saying: "All of our customers are experiencing inflation now. But at Tesco we've done our best to mitigate that so the inflation in Tesco is 1 percent below that of our peers so actually our prices are sharper in Tesco in this first half year versus the market." Yet shares lost ground after an initial spike. likely on the back of lingering concerns over the firm's longer-term future Analysts wonder for how long Tesco will be able to squeeze suppliers, work with a weaker sterling and battle aggressive competition, especially from abroad. All this while a trial is still ongoing over the 2014 scandal. Carl Rogberg and John Scoulder deny fraud and false accounting, along with Christopher Bush. Their trial has heard how 2 members of Tesco's financial team resigned at the time because they felt accounting practices were unlawful. It's due to last several weeks.

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Tesco's penny dividend fails to impress

Wednesday, October 04, 2017 - 01:48