New profits fall for Tesco

Tesco's latest financial results have shown a large fall in profits.

The troubled supermarket has been working to turn its business around, but underlying profits for the first half of its financial year were down 55 per cent. Last year, it made £779 million during the period – this year just £354 million. In addition, like for like sales were down 1.1 per cent, however sales volume rose 1.4 per cent. The number of transactions was also up by 1.5 per cent.

Pre-tax profits were up to £74 million, compared to a loss of £19 million for the same period a year ago.

Recently, chief executive Dave Lewis has focused on improving profits by offering price cuts and increasing staff levels – two strategies that were expected to attract customers into the shops.

He told the BBC that he was "quietly confident" about the firm seeing a turnaround and said that the group hit a low point at the end of last year.

"We obviously had some issues to deal with, we dealt with them. It meant that in the second half of last year we made no profit whatsoever in the UK.

"So if I compare to the second half of last year, the first half of this year feels like we've made some progress," he explained.

Mr Lewis noted that sales are growing compared to where they were a year ago and that the firm has generated a profit.

"But at importantly at the same time, improving what it is we're doing for our customers," he added.

National Living Wage

Tesco has also warned that the government's National Living Wage rate will impact the company. It says it will cost about £500 million to meet the rate of £9 an hour by 2020.

Mr Lewis said the group already paid more than the £7.20 minimum wage that will be introduced in April 2016, and that extra staff benefits brought the hourly rate up, closer to £9.