Tesco (LSE: TSCO) 1H17 Results: Comps Strengthen as Volumes and Transaction Numbers Grow

Executive Summary

• UK grocery giant Tesco reported 1.4% growth in first-half revenues to £27.34 billion, trailing the consensus estimate of £27.77 billion.
• UK comps strengthened to +0.6% and group comps improved to 1.0% at constant exchange rates. Comparable sales growth improved sequentially across the first half, and 2Q UK comps beat consensus.
• The gross margin grew and the SG&A ratio declined, leading the operating margin to climb to 2.2% before exceptional items, the net loss to fall and the loss per share to decline. EPS, before exceptionals, beat consensus.