Tesco rebounds into slender annual net profit

Tesco said Wednesday that it rebounded into slender annual net profits on strong sales, after a vast property writedown and challenging home trade sparked a record loss the previous year.

The troubled British supermarket giant revealed that earnings after taxation stood at £138 million ($197 million, 172 million euros) in its 2015/2016 financial year, which ran until the end of February.

That contrasted sharply with a enormous loss of £5.7 billion in 2014/2015, Britain's biggest retailer added in a results statement.

Pre-tax profits meanwhile stood at £162 million after a loss of £6.3 billion last time around.

Tesco hailed the "significant progress" as it returned to full-year profits, and also revealed the first quarter of sales growth for three years.

Like-for-like sales in home market Britain, stripping out the impact of new floor space, grew 0.9 percent in the group's fourth quarter.

Tesco -- which was rocked by crisis in October 2014 after overstating profits in an accounting error -- is the world's third-biggest supermarket chain after France's Carrefour and global leader Walmart.

- 'Regained competitiveness' -

"We have made significant progress against the priorities we set out in October 2014," said chief executive Dave Lewis in the earnings release.

"We have regained competitiveness in the UK with significantly better service, a simpler range, record levels of availability and lower and more stable prices.

"Our balance sheet is stronger and we are making good progress in rebuilding trust in Tesco and our investment case."

However, Lewis cautioned that the supermarket titan continues to face a "challenging, deflationary and uncertain market".

The group also warned that its investment in price cuts would slow its profit improvement particularly in the first half, sending its share price down sharply in Wednesday morning deals.

Tesco shares lost 4.81 percent to 186.85 pence, topping the fallers board on London's FTSE 100 benchmark index of top companies. The FTSE was however 1.11 percent higher at 6,311.7 points.

In recent years, Tesco's performance has been hurt by increased competition in Britain, particularly from German-owned discount retailers Aldi and Lidl, as well as Morrisons, Sainsbury's and Walmart-owned Asda.

In a bid to turn around its fortunes, Tesco appointed outsider and former Unilever executive Lewis in July 2014 to replace long-standing chief executive Philip Clarke.

Lewis said Wednesday that management actions had "stabilised" the business, which he admitted was in "crisis" when he replaced Clarke.

- Cost-cutting drive -

In January 2015, the Tesco boss launched a cost-cutting drive under which he has closed 60 unprofitable shops and axed plans to open another 49 branches.

The group has ploughed cash into cutting prices in a bid to boost sales.

Tesco has also offloaded a series of assets and last year sold South Korean unit Homeplus for more than £4.0 billion.

On Tuesday, Lewis began the next expected wave of asset sales, with the disposal of an 8.6-percent stake in Singaporean online business Lazada to Chinese e-commerce giant Alibaba for £91 million.

Media reports suggest that Tesco plans to sell its Dobbies Garden Centres chain, coffee shop Harris & Hoole and restaurant Giraffe, in order to focus on its main supermarket business.

Lewis however declined to comment on this on Wednesday.

Last year's record loss was prompted by £7.0 billion of one-off charges, mostly linked to a writedown on the value of Tesco's property.