Business News

Profits Rise at Tesco Despite Brexit Worries

BUSINESS Profits Rise at Tesco Despite Brexit Worries

Businesses all across the United Kingdom were engulfed in pessimism two years ago when the country voted to leave the European Union, and throughout the period, the fortunes of many businesses have taken a hit. The recent issues regarding the UK’s official exit from the EU have also heightened uncertainties and proved to be an impediment to smooth functioning of businesses. Despite all that, one of UK’s biggest departmental store chain Tesco has announced a healthy 28% jump in profits for 2018, and it reflects the company’s continued efforts to stage a turnaround from the lows in which it found itself a few years ago. At the time, the company had been embroiled in an accounting scandal and the stock had plummeted.

Dave Lewis, the Chief Executive Officer of Tesco, has stated that he is confident that the company will continue to go from strength to strength and believes that the next few years will see the company complete its turnaround. “After four years we have met, or are about to meet, the vast majority of our turnaround goals. I’m very confident that we will complete the journey in 2019/2020. I’m delighted with the broad-based improvement across the business.” The profits before taxes for the year 2018 stood at £1.7 billion, and it has also announced a bigger dividend to its shareholders following the big jump in profits.

However, dangers remain for Tesco, and the merger between ASDA and Sainsbury’s is perhaps the biggest threat to the company at the moment. That being said, the merger is still far from completed and is being reviewed by the UK’s anti-trust authorities. One of the partners at Begbie Traynor, a corporate restructuring firm, stated that there are plenty of external threats to Tesco and the company would need to continue to evolve in order to stay competitive. She said, “External threats are also putting pressure on the retailer with continued uncertainty due to Brexit and the turbulent High Street conditions, evidenced by its decision to cut up to 9,000 jobs by shutting the fresh food counters at 90 stores.” It remains to be seen if Tesco itself goes on an acquisition spree in 2019 or not. However, at the moment, the company should be happy with their performance, and it is particularly heartening since consumer spending in the UK had taken a dive in the month of March due to the uncertainties surrounding Brexit.

About author

Jennifer Simmons has joined FinanceBottom as a news writer covering beats such as business, finance and economy. She has worked as a news reporter but she loves to write news stories. Often her articles appear on front page.
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