By Geoffrey Smith
Investing.com -- Tesco (LON:TSCO), the U.K.’s biggest supermarket chain, is emerging from a nightmare that began four years ago with an accounting scandal.
At least, that’s CEO Dave Lewis’s conclusion after the grocer reported a solid set of numbers for the three months through March (the last quarter of its fiscal year) on Wednesday, thanks largely to the performance of wholesaler Booker, which it bought last year.
The numbers will give long-suffering shareholders more confidence that it can continue to hold its own in a notoriously competitive market, where it faces the twin threat of online competition and aggressive German discounters Aldi and Lidl.
The shares rose 1.4% in response, before trimming gains later. They're still close to a six-month high, although still barely half the level they were when it emerged that its managers had been padding the accounts by booking revenues prematurely - a tactic that backfired badly when the expected revenues failed to materialize.
Lewis, who replaced Philip Clarke as CEO after the scandal came to light, said Tesco’s “continued capital discipline and strong improvement in cash profitability” had allowed it to nearly double its dividend this year to 5.77 pence (most of it coming with a final 4.10p interim payout announced today).
It’s the first major earnings release of the quarter in Europe, and it’s a reminder that, in a quarter dominated by headlines about Brexit and the global economic slowdown, domestic demand in Europe is still relatively strong. Average earnings in the U.K. are growing at their fastest in 10 years, and have outpaced inflation for a full year.
Markets across Europe opened brightly Wednesday, after the White House played down suggestions that it was opening a new front in a trade war by preparing tariffs against EU imports in response to what it sees as unfair subsidies to aircraft maker Airbus.
At 04:00 AM ET (0900 GMT), the benchmark Euro Stoxx 600 was up 0.38 points, or 0.1% at 386.52. Germany’s Dax was up 0.4%, while the U.K. FTSE 100 was down 0.1%, a reflection of another Brexit-related uptick in sterling.
A big negative outlier was U.K. drugmaker Indivior (LON:INDV), which fell as much as 68% after U.S. prosecutors accused it of lying about the risks of its opioid Suboxone Film. The stock has now lost over 90% from its peak last year, when its problems with the U.S. authorities started to emerge.