Tesco,Britain's biggest retailer, says its recovery is gaining pace. But as Hayley Platt reports, it warned a supermarket price war meant profit growth would be hard to deliver this year.
It's a good start to the year but Tesco's chief warns of a bumpy road ahead. Britain's biggest retailer reported it's first rise in sales growth for over three years. Operating profit for the year was more than 900 million pounds - compared to last year's record £6.4 billion loss. Shares in Tesco have risen 31 percent so far this year on hopes of a recovery. But fell more than 5 percent in morning trade. (SOUNDBITE) (English) RABOBANK, SENIOR CURRENCY STRATEGIST, JANE FOLEY, SAYING: "Clearly there is a huge amount of competition on the domestic stage in the UK with regard to supermarket sales. This is coming from potentially low cost suppliers such as Lidl etc, so a huge amount of competition. Chief Executive is sounding extremely cautious, so whilst it is a massive relief that Tesco appears to be out of crisis, I think we should not be popping open the champagne corks just yet." Lewis is trying to revive the company's fortunes by focussing on lower prices and improving customer service. He also wants to rebuild trust after the accounting scandal of 2014 badly bruised its reputation. But keeping prices low while also investing in the quality of its products, won't be easy. (SOUNDBITE) (English) RABOBANK, SENIOR CURRENCY STRATEGIST, JANE FOLEY, SAYING: "I think we can also refer to low wage growth in the UK too which of course makes people cautious of the extra money that they would have and very cautious about how they spend their money." The real challenge will be how Tesco plans to rebuild its profits in a market where rival discounters continue to steal market share. ///