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Tesco to return to full-year profit

Press AssociationPress Association 13/04/2016

Britain's Tesco will announce a return to full-year profit and unveil its first quarter of sales growth for three years as the turnaround under boss Dave Lewis gathers pace.

The supermarket giant is expected to post bottom-line annual profits of STG447 million ($A830.16 million) as it moves on from its woes in 2014, which led to it posting a staggering STG6.4 billion loss in the year to February 2015 - one of the biggest in UK corporate history.

This took into account massive one-off writedowns on the value of the supermarket's property portfolio, but even on an underlying basis, the group is set to see a vast improvement.

The City is pencilling in adjusted earnings of STG932 million, down 3 per cent, but far better than the 68 per cent fall it reported a year earlier.

Mr Lewis revealed a surprise 1.3 per cent jump in sales over the six-week Christmas period and the performance is likely to have carried over to its fourth quarter.

House broker Barclays estimates the grocer saw UK like-for-like sales rise by 0.8 per cent in the final three months of its year - its first full quarter of growth since 2013.

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

He took over at a grim time, with Tesco uncovering a STG326 million accounting black hole in autumn 2014 that plunged the group into crisis.

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

Tesco has shut 53 unprofitable stores since the start of its financial year and shelved plans to open a further 49 stores.

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