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Tesco 'on cusp of something special', says UK boss
March 16, 2016 / 10:17 AM / 2 years ago

Tesco 'on cusp of something special', says UK boss

LONDON (Reuters) - Tesco’s UK boss gave on Wednesday the most bullish assessment of prospects for Britain’s biggest retailer since it was rocked by an accounting scandal in 2014, saying it was winning back customers and “on the cusp of doing something special”.

People walk past a Tesco Extra store in Woolwich, southeast London, Britain February 26, 2016. REUTERS/Stefan Wermuth

Speaking at the Retail Week Live industry conference, Matt Davies highlighted the feedback the supermarket group was getting from its more than 3,500 stores in Britain.

“On every key measure of great service, customers are more positive about Tesco than they’ve been for years,” said Davies in his first official speech as chief executive of Tesco’s core UK and Ireland business.

Davies joined Tesco last May, having previously been CEO of bikes to car parts retailer Halfords and Pets at Home.

Sales, profit and asset values at Tesco have been hit by shifts in shopping habits and the rise of German discounters Aldi and Lidl, while an accounting scandal in 2014 left the company on its knees. However, when Tesco updated on Christmas trading in January it reported its first like-for-like sales growth for four years. Improving monthly industry data has followed, adding to hopes Tesco may finally be recovering under group CEO Dave Lewis. Tesco shares have increased by more than a quarter over the last three months. Lewis, who joined in September 2014, is trying to revive Tesco with a focus on lower prices, improved product availability and customer service, along with better relationships with suppliers. He has also sold assets and cut costs - including thousands of jobs.

“We differentiate (from competitors) through that optimum balance between quality, service, range and availability,” Davies told reporters after delivering his speech.

There are growing signs 2016 could be a better year for Britain’s big supermarkets, which have been hammered by a price war and lost ground to the discounters.

Last week Morrisons, Britain’s No. 4 grocer, reported a first quarterly rise in underlying sales for four years, while on Tuesday Sainsbury‘s, the No. 2 player, posted its first quarterly sales growth for more than two years.

Davies said Tesco’s recovery strategy was not predicated on the overall market getting easier.

“On the one hand I do think we’re making some really good progress. On the other hand one has to understand how competitive this sector is and the challenges that are in front of all of us,” he said.

“As we develop our strategy it’s with no assumption that the market is getting any easier.”

Editing by Mark Potter

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