Results round-up: Tesco, WH Smiths

Tesco reported a 29.9% rise in group full year operating profits to £1.28bn on the back of a 4.3% increase in group sales to £49.9bn.

The figures exclude an exceptional charge of £235m, including a deferred prosecution agreement between Tesco and the UK Serious Fraud Office over historic accounting practices and an agreement with the UK Financial Conduct Authority of a finding of market abuse in August 2014.

Profits at Tesco's UK arm soared 60% to £803m as it delivered its first growth in like-for-like sales since 2009/10.

The company said it intended to resume dividend payments in 2017/18. Pre-tax profits, which included exceptionals, fell to £145m from £202m a year ago.

The return to sales growth will give a boost to chief executive Dave Lewis's plans to take over Booker, owner of the Budgens and Londis chains. Shareholders have expressed concerns over the £3.7bn deal, with Schroders one of the major opponents.

“We are ahead of where we expected to be at this stage, having made good progress on all six of the strategic drivers we shared in October. We are confident that we can build on this strong performance in the year ahead, making further progress towards our medium-term ambitions,” said Lewis said.

Last month Schroders and Artisan Partners, who hold a combined 9% stake in Tesco, wrote separately to chairman John Allan asking him to withdraw from the deal as it would distract from the company's recovery plan.

Laith Khalaf, senior analyst at Hargreaves Lansdown said the profits had been "diminished" the size of the fines fort mis-stating profits.

WH Smiths

Retailer WH Smiths grew profits 4% in the first half of the year as sales from its travel arm more than offset continued decline of the high street business.

Group revenues in the six months to 28 February came out at £643m, up 2% on the same period last year thanks to a net 23 more stores open by the period end, but were flat on a like-for-like basis as travel LFL sales rose 5% and high street LFL sales fell 3%.

Group profit before tax increased 4% to £83m and diluted earnings per share increased by 7% to 61.6p, reflecting share buybacks.

An interim dividend of 14.6p per share was declared, up 9% on last year.

Travel, the division that includes outlets in stations and airports run either directly or via joint-ventures or franchises, grew trading profit 11% to £39m from total sales up 10% thanks to 3% of forex benefits from the international business plus new store openings.

The UK side of the travel business was said to be on track to open 15 outlets over the full year, while the international business won 23 new tenders in the half, including 10 units in Singapore's massive Changi airport, to take the total to 255, of which 213 were open at the end of February.

High street profits were flat at £53m, in line with expectations as the division matched a strong performance last year, as gross margins were boosted from £7m of cost savings in the half, with a further £3m identified for the second half.

Stationery performed particularly well over the Christmas period driven by strong sales from our new seasonal product ranges and books benefitted from good sales of spoof humour titles.