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UPDATE 1-Tesco's first-half profit falls as Murphy era begins

Wed, 7th Oct 2020 07:28

(Adds details)

LONDON, Oct 7 (Reuters) - Tesco, Britain's biggest
retailer by sales, on Wednesday reported a 15.6% fall in core
profit, with a jump in sales due to the COVID-19 pandemic more
than outweighed by higher costs and losses at Tesco Bank.

The group, led since the start of the month by new chief
executive Ken Murphy, made operating profit before one-off items
of 1.037 billion pounds ($1.34 billion) in the 26 weeks to
August 29, down from 1.229 billion pounds in the same period
last year.

However, the group forecast that retail operating profit in
the full 2020-21 year would be at least the same level as
2019-20 on a continuing operations basis.

UK like-for-like sales rose 7.6% in the first half, having
been up 8.7% in the first quarter, while the response to the
pandemic led to 533 million pounds of costs.

Tesco Bank made a loss of 155 million pounds and a loss of
175-200 million pounds is still expected for the full year.

Murphy, formerly at healthcare group Walgreens Boots
Alliance, succeeded Dave Lewis, who in his six years at
the helm put Tesco back on track after an accounting scandal and
refocused the group on its home market.

But Tesco still faces major challenges, most notably the
long-term impact of the pandemic, a recession and disruption
when Britain's Brexit transition period finishes at the end of
2020.

Shares in Tesco, which has a 27% share of Britain's grocery
market, went sideways during Lewis' tenure and last week the
group briefly lost its position as Britain's most valuable food
retailer to online specialist Ocado.

The group also named Tate & Lyle's Imran Nawaz as
its new finance chief. He will succeed Alan Stewart who is
retiring in April.

($1 = 0.7756 pounds)
(Reporting by James Davey, editing by Estelle Shirbon and Paul
Sandle)

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